On Tuesday, September 1, 2015, a federal judge granted class action certification in a lawsuit against Uber. The lawsuit argues that Uber labels their drivers as independent contractors when they should actually be considered employees. Labeling workers as independent contractors rather than employees is a method employers frequently utilize in bad faith to keep labor costs low, because it allows them to avoid paying workers \u00a0minimum wage and overtime compensation. It also allows employers to avoid paying for health insurance or payroll taxes to workers. Class action certification was granted to Uber drivers who directly contract with Uber and to those who were drivers before June 2014.<\/p>\n
This ruling is critical because it could affect the heart of Uber’s business model, which classifies drivers as independent contractors in order to keep labor costs low and while hiring people who use their own cars to drive customers.<\/p>\n
The court found Uber’s argument, that some Uber drivers actually prefer to be independent contractors rather than employees, to have no merit. If the court ultimately finds in favor of the drivers and against Uber, it will affect more than 160,000 drivers. Additionally, a ruling against Uber would make it more difficult for the company to return profit to its investors.<\/p>\n
The court’s grant of class-action certification has the potential to affect other workers in similar employment situations. For example, there is currently a lawsuit against Lyft, a competitor to Uber, and the lawsuit seeks class action certification for similar claims.<\/p>\n