A debate has been raging all year surrounding class-action lawsuits against sharing-economy companies like Uber, Lyft, Instacart, Postmates, and others about whether their drivers/personal shoppers should be considered employees rather than independent contractors. And a federal judge has just dealt a new blow in favor of the workers, as the Business Times reports, ruling that many more workers may join the class action against Uber, and that they can sue for unreimbursed expenses like gas.
As estimated earlier this year, reclassifying California Uber drivers as employees would cost the company some $209 million in this state alone, with many more hundreds of millions if the ruling has broader consequences in other states and hundreds of millions more when you add in the gas and expenses part. The debate is not likely to end anytime soon, however, and it may be up to Uber to settle it by giving in and admitting they're a transportation network, and not a software company, at some point.
At issue was a 2014 arbitration clause in Uber driver contracts, which U.S. District Judge Edward Chen has ruled is unenforceable, per Reuters. This means some 160,000 California drivers of Uber Black, UberX, and UberSUV cars since 2009 can potentially join the suit. In a statement, Uber says they'll be appealing the ruling "immediately."
As Wired notes, back when the class action was allowed to move forward in September, Uber was trying to downplay the possible impact of the suit by saying that only a fraction of those 160,000 drivers would even be eligible, then estimating about 10 percent. And they note a recent New York Times DealBook piece highlighting the corporate trend of inserting arbitration clauses in order to avoid situations like this, which may end up being a failed move on Uber's part, at least in California.
The Chronicle also points to an earlier ruling that drivers could seek tip compensation from the company, which since its beginnings has told riders that tips were included in every fare something that we learned this year isn't exactly true.
Uber is now valued at a staggering $62.5 billion, making it one of the most highly valued U.S. corporations of all time, so we're pretty quickly begging the question of how they can't afford to make these people employees though, to be sure, their rapid rise in value has had something to do with low overhead and a business model that keeps the workers in their core operation, who are the drivers, as contractors.