Uber Technologies, Inc. is one of the most successful startups in recent times to take the world by storm. The ease of use, and convenience quickly spread throughout the world to where the company name became a verb. In recent months, there have been many legal challenges brought mainly by governments and the taxi lobby about whether the service offered by the San Francisco tech giant is actually legal and safe, given the lack of licensing compliance required to be a driver. One of the more recent lawsuits of interest was filed in the United States District Court for the Northern District of California whereby the plaintiffs alleged that they were employees of Uber and are entitled to tips and maintenance expenses for their cars.
Are Uber Drivers Misclassified As Independent Contractors?
As you are likely aware, Uber’s drivers are typically part time individuals looking to make a few extra dollars on the side by getting people from A to B. However, more and more people engage with Uber as it being their full-time job, given the slow economy. Each driver is classified by Uber as an Independent Contractor, which means that Uber believes it does not have to offer benefits or reimbursement of expenses, as it would with an employee. Much controversy has arisen around the question: “are Uber drivers being misclassified as independent contractors?“, and this question has arisen more and more in similar “sharing economy” type businesses.
Department Of Labor Guidance On The Independent Contractor Vs. Employee Debate
On July 15, 2015, the Department of Labor issued the “Administrator’s Interpretation No. 2015-1” guidance which expands the definition of an employee and restricts that of an independent contractor. The guidance focused on whether the individual in question had “real economic independence”, or in other words, were they in business for themselves. This guidance would appear to cause the lawyers at Uber some concern, given the growing trend of individuals leaving their existing jobs to work as an Uber driver full-time.
The Lawsuit Allegations And Class Certification
On September 1, 2015, District Judge Edward M. Chen granted class certification to Uber drivers in California, limiting the class to those who had signed up to become a driver before June 2014. Judge Chen disagreed with the argument by Uber lawyers that a class would not work because the relationship between Uber and each driver was too “idiosyncratic”. This certification by Judge Chen now opens up the lawsuit to 130,000 Uber drivers in California who believe that Uber did not pay them the tips they deserved, and did not reimburse them for maintenance and expenses related to the cars the individuals used in order to perform their Uber duties.
This is just one of many lawsuits currently pending against companies in the sharing economy (also known as gig or on demand economy). In recent months, similar lawsuits have been filed by members of Lyft, Postmates, Caviar, and HomeJoy, which are other companies similar to Uber in that individuals perform services as independent contractors, however have to execute those services and duties with the requirements of an employee, and are not being compensated and afforded the rights that an employee gets.
Stay tuned for more news on this developing area of wage and employee rights protection. If you have questions, please feel free to contact me or one of our experienced workers’ rights lawyers.