A legal challenge to Uber’s business can proceed as a judge granted class action status to a lawsuit that accuses the ride-sharing company of treating its drivers as if they were employees — yet they do not get the benefits that regular employees would.
As reported by The Wall Street Journal on Tuesday (Sept. 1), the suit, initially filed by three Uber drivers, was granted class action status in California, according to a ruling in a U.S. District court in San Francisco.
And, WSJ noted, that ruling means a “high-profile legal battle” looms that could also have a strong impact on Uber’s business model, along with that of several dozen startups that use independent contractors.
If the class action suit is indeed victorious, Uber could be on the hook for expenses, ranging from health insurance to workers’ compensation, and could even have to pay its drivers for fuel and toll costs.
Uber, WSJ said, has stated it will appeal the class action status designation. In addition, the company also said that the ruling allows only a minority of drivers to join the suit, for a majority of Uber drivers had to opt out when they signed new contracts last year.
Attorneys representing the three drivers and the move toward class action have argued that Uber controls enough of the activities that drivers do and what they actually can control in the ride share itself — from fares to ultimate job termination — that they are de facto employees.
With a nod toward the controversy that surrounds the “are they or aren’t they” employee question, other companies have been in the midst of changing their very business models that rest on the activities of freelancers, said WSJ. Those companies include delivery startups, like Shyp and Instacart, which have begun to classify workers as employees, while other companies, such as Lyft, instead have stayed with the independent contractor designation.
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