Dive Brief:
- The lawsuit against Uber over the status of their drivers as contractors instead of employees was granted class-action status — meaning it could affect the 160,000 drivers in California, and potentially beyond, reports Bloomberg.
- The drivers can now, as a full group, press the central claim of the case: that they can seek reimbursement for mileage and tips.
- If the final ruling is made in favor of the drivers, Uber could ultimately be responsible for worker's compensation and unemployment as well, cutting into the company's $50 billion valuation.
Dive Insight:
No matter which side wins the case, the ruling is likely to set precedent for similar cases throughout the U.S., says Bloomberg.
Beth A. Ross, an employment lawyer who won a similar case against FedEx Corp., told Bloomberg that the case is "a very big deal." In the FedEx case brought by its drivers, also ruled a class action, the company agreed to a $228 million settlement. That case is being considered by District Judge Edward Chen in his deliberations, Bloomberg reports.
"The question in this case is whether Uber's business model is lawful or unlawful. If that question gets to be decided on a class-wide basis, that's the whole ball game," Ross said.
Uber claims that only a "tiny fraction" of the 160,000 drivers in the state will be considered class members under the arbitration, reports Huffington Post. The lawyer representing the drivers, however, says this claim is incorrect.
In making this decision, Chen wrote that there is simply "no basis" to support Uber's claim "that some innumerable legion of drivers prefer to remain independent contractors rather than become employees," the Post says.
Issues on staffing and employment status have garnered massive attention by the courts and, most recently, the National Labor Relations Board. The NLRB recently made headlines for ruling that companies can be held equally responsible for labor violations committed by their contractors — potentially transforming how some companies staff certain jobs.
