Last week Tuesday, Uber drivers scored against Uber when a U.S judge granted them class action status on suit filed by three drivers on whether they are employees or independent contractors of the company. This case could have huge implications on the company if it goes against their wish.
Three Uber drivers are litigating Uber Company in San Francisco where they claim they are full-time employees of the company and ought to be entitled to full employee benefits including the reimbursements for expenses (vehicle maintenance and gas) they incur while on duty. The drivers are currently responsible for any expenses incurred.
What I think
You remember the California case where a woman sued Uber and demanded to be classified as the employee of the company? The woman won the case and received the perks she was fighting for based on the fact she was now classified as the employee of the company. However, the judgement did not affect other drivers because it was not a class action lawsuit.
That judgment has now come back to haunt Uber because its drivers want to be classified as employees. The California cases was unprecedented because it was the first time a contractor was classified as an employee in the sharing economy. We saw a similar cases between Fedex and its drivers where they were seeking to be recognized as employees, complete with health insurance, worker’s compensation and many other benefits.
The current lawsuit involves three drivers who have successfully applied for class action. If the class action were to be denied, then the three drivers would share both the cost of filing for the case and any potential payout. Now that the case has now changed to class action, any driver can enjoin in the case and the potential payout will be much bigger. So in case the court decide that Uber drivers are Uber employees rather than independent contractors, then the company will suffer huge financial loss in terms of compensations and benefits payout.
Currently the case doesn’t involve all Uber drivers except the 160,000 drives based in California. It means any or all the 160,000 can seek to be enjoined as plaintiffs. It has also been reported that the case only involves UberXL, SUV and Black drivers. There is yet another case in Massachusetts (against Lyft) that is also seeking class action. The case will be determined in December.
What are the advantages and disadvantages of class action court cases?
Merits of class action lawsuits:
- There is no need to look for an attorney to represent you
- No matter the extent of the harm, whether big or very small, you can become a member of the same litigation.
- There is no need to pay legal costs in advance
- Members in the lawsuits are not required to be present during the trial because you don’t have to testify or be interrogated
- You can join forces with others to win against a giant corporation such as Uber
- You receive your own share of payouts, if any.
Demerits of Class Actions litigation
- You no longer have the right to independently prosecute the defendant
- The case goes beyond you and you no longer have the control of the case
- You don’t participate in the trial even if you are an equal member
- You don’t have access to the way your attorney is handling the case and your opinion might never be taken into consideration
- You agree to abide by the decision of the judge/jury
- The right to appeal is taken away from you.
What about if you decide to go the arbitration route?
Wikipedia defines arbitration as a form of alternative dispute resolution that involves people outside the court precincts. In the arbitration, you have the arbitrator (or the arbiters/arbitration tribunal) and the disputing parties. The parties must agree to be bound by the final decision of the tribunal. The arbitration decision is legal binding on both sides, including in the courts. It is very important to note that the arbitration tribunal should compose of individuals who are neutral. In this case, if Uber were to follow the arbitration route, they would file a complaint and a neutral party would decide the case.
In case you are not aware, there is one arbitration case that many drivers signed without really knowing the contents. It is possible you don’t even know it, but the thing is, Uber messed up the whole thing with their lawyers during the drafting process. The good thing is, a judge ruled that one party cannot force the other party to an arbitration agreement (it wouldn’t then be an agreement in that circumstance). So Uber were ruled out of order to enforce its own version of agreement on drivers. What they did is that they issued a 2014 notice wherein they wanted every driver to sign the Raiser Software agreement. In essence, they were trying to cajole drivers into signing the document hence forcing every driver into an arbitration which would have the effect of automatically disqualifying them from any class action against the company.
Luckily for the drivers, the judge did not agree with Uber that drivers can be forced into signing an arbitration agreement. Although Uber are trying to appeal the ruling, the chances of overturning the ruling are pretty bleak.
In 2013, Uber wanted its drivers to either send a registered letter to their San Francisco headquarters or hand deliver it, which became almost impossible. Although the 2014 requirement was relatively easier because they added an email option, the judge still found it difficult to enforce. In both cases, the opt-out instructions were not clear. When you read the 2014 document, you will see several instances where the company is clearly stating that anyone who agrees to sign to the agreement will be excluded from any class action against that company. In other words, the company was indirectly forcing its drivers to opt out of any class action against it. The prayer of every Uber driver is that the judgement is upheld and Uber are prevented from forcing its drivers into opting out of class action lawsuit.
The problem is that many people are not away of this. Everyone involved in this should be made aware of the impact of signing the agreement. I repeat, by signing the Uber arbitration agreement, you are at the same time opting out of any class action against the company.
I will continuously update this post as more information comes in concerning the case at hand. To say that this case has huge implication on Uber would be an understatement and this might affect other sharing economy companies across the country. So the case doesn’t just affect Uber drivers, but every other sharing economy company.
There are many cases that have been determined and in most cases, the companies have bitten the dust. For instance, HomeJoy converting some of its contract workers to employees as well as Instacart. Many other sharing companies are waiting with berated breath the outcome of the case. It is going to be a tense 6-12 month period.
Formal Response from Uber:
Reacting to the ruling, here is Uber’s official response.
- Only a few hundred Uber drivers can be part of the case because those who stopped driving prior 2014 and those who signed the arbitration agreement are disqualified. Many drivers who have joined the company joined after the case commenced.
- UberBLACK drivers cannot join the case because most of Uber’s business prior 2014 was mostly drivers who worked for Limo Companies. Reason? The judgment states that those drivers had no direct contract agreement with the company. As a matter of fact, one of the three original drivers has only been working for UberBlack and cannot be part of the case any longer.
- Those who registered with the companies as corporation are also not eligible.
What this means is that the class action will involve way less than the 160,000 Uber drivers in California. In fact, potentially, those eligible are slightly less than 15,000. There is every chance this number could further fall depending on the outcome of another case involving Gillett and Uber.