On September 1, U.S. District Judge Edward Chen in San Francisco granted Uber drivers class action status in a lawsuit to determine the drivers’ classification as independent contractors or employees. There are many factors, including behavioral, financial, and type of relationship, that can determine whether a worker is considered an independent contractor or employee.
Three drivers are suing Uber, claiming they are employees and entitled to reimbursement for expenses — which include gas and car maintenance. The drivers currently pay those costs out of pocket.
Under the ruling, Judge Chen stated that drivers can sue as a group. This means the lawsuit may cover over 160,000 California drivers, which could provide plaintiffs with additional leverage to negotiate a settlement rather than going to trial.
According to Reuters Legal, “The results of Uber’s legal battle could reshape the sharing economy, as companies say the contractor model allows for flexibility that many see as important to their success. An ultimate finding that drivers are employees could raise Uber’s costs beyond the lawsuits’ scope and force it to pay Social Security, workers’ compensation, and unemployment insurance.”
In June 2015, a California labor commissioner ruled that an Uber driver was an employee, not a contractor. Uber appealed this decision.