California’s Supreme Court has handed Uber drivers a victory against the company.
The court on Monday (July 17) ruled against the tech giant’s argument that aimed to limit efforts by drivers to bring employment disputes before a judge.
In 2019, Uber Eats driver Erik Adolph sued the company, arguing that Uber wrongly classified him and other drivers as independent contractors rather than employees, and thus failed to reimburse them for business expenses.
The following year, Adolph amended his complaint to include a civil penalties claim under California’s Private Attorneys General Act (PAGA), a law that is unique to the state and which allows workers to sue their employers in the name of the state. If the workers prevail, they keep 25% of the winnings, with the rest going to a state fund.
The trial court sided with Uber, moving the matter to arbitration and dismissing Adolph’s class action claims.
In Monday’s unanimous decision, the judges ruled that Adolph could not sign away his right to represent his peers in a class-action lawsuit.
A report by Reuters notes this ruling could undermine the impact of a U.S. Supreme Court ruling from last year that said companies could force individual PAGA claims into arbitration, and could mean that California employers will face more broad-scale lawsuits.
“The California Supreme Court’s decision contravenes the U.S. Supreme Court’s holding in Viking River, violates the Federal Arbitration Act, and undermines the legislature’s intent in enacting PAGA,” Theane Evangelis, Uber’s counsel, said in a statement to PYMNTS. “We are considering our appellate options.”
The ruling comes nearly two weeks after a decision by New York State Supreme Court Justice Nicholas Moyne that temporarily halted a new minimum wage law opposed by Uber and other app-based food delivery companies.
The law, which had been set to take effect July 12, mandates that companies pay delivery workers $17.96 an hour, with that figure set to reach nearly $20 per hour by April 2025. The companies contend that labor costs could make it infeasible to offer some services.
These court cases come at a time when, as PYMNTS research has found, a little more than three-quarters of all gig workers live paycheck to paycheck — a figure that’s much higher than other workers.
Meanwhile, 42% of gig workers said they had to wait too long to get paid, with 45% saying they had turned down a potential opportunity due to a long onboarding process. Upwards of 80% said they would give up the flexibility of gig work if it meant earning more money.