Uber’s Attempt to Avoid Class-Action Lawsuit

Uber has faced one of its biggest courtroom confrontations in its effort to and convince a judge to block a lawsuit from turning into a class-action suit.

The suit in question seeks mileage and tip reimbursement for 160,000 Uber drivers in California. The case will go before US District Judge Edward Chen where he will decide whether it should be granted class-action status.

This court case comes at a time when on-demand companies like Uber, Lyft and Postmates are showing rapid growth and have become quite popular because they have been able to create a vast pool of cheap and flexible labor as well as provide users convenient transportation. Freelancers Union reports that approximately 53 million Americans now work as freelance contractors. The American Action Forum also reports that independent contractors account for 29 percent of jobs that were added between 2010 and 2014.

However, the rise in freelance workers has not been accompanied with protections for such workers. Independent workers do not receive any Social Security, Medicare and workers’ compensation. They also cannot unionize. Unless and until broader protections are provided to such workers, this business model may not be able to survive for too long.

The California Labor Commission has already ruled in June that San Francisco based Uber drivers should be considered as employees and should receive compensation for mileage and other expenses. Companies like Luxe, Instacart and Shyp have also announced their intention to convert some of their employees to part time or full time status. However, Uber continues to face allegations about unfair treatment to its freelance contractors.

Uber’s lead counsel Ted Boutrous told the judge that it would not be wise to lump the issues of thousands of drivers into a single suit. His argument is that there is no such thing as a typical Uber driver. He also argued that converting Uber freelancers to employees would threaten the flexibility and independence that the drivers currently enjoy.

However, Shannon Liss-Riordan, who is representing Uber drivers, believes that the question of whether Uber drivers would prefer to be employees or contractors is completely irrelevant in this scenario. Wage laws are implemented to provide protection to workers and to check against business activities that enable them to gain an unfair competitive advantage.