Photographer: Andrew Harrer/Bloomberg

Uber Drivers’ Lawsuit Over Pay Just Got Much Costlier

  • Tens of thousands of California drivers may join class action
  • Expense reimbursement added by judge on top of claims for tips

Uber Technologies Inc. drivers seeking to be treated as employees won a ruling that adds tens of thousands of them to the case and may put hundreds of millions of dollars more at stake.

A judge’s decision Wednesday that will likely let the vast majority of Uber’s 160,000 drivers in California join the case as it heads toward trial in June expands the company’s liability exponentially, legal experts said. A victory for the drivers threatens to upend the ride share company’s business model and cut into its more than $60 billion valuation.

The drivers can now seek expense reimbursement, including as much as 57 1/2 cents for every mile driven, in addition to their claims for tips that are already part of the case, under the ruling by U.S. District Judge Edward Chen in San Francisco.

“A lot rides on this case,” Catherine Fisk, a law professor at the University of California at Irvine, said before the ruling was issued. “Uber’s business model rests on outsourcing to its employees the fixed costs of running a huge fleet of cars for hire." While reimbursing any individual driver for her expenses is small, “in the aggregate it appears to be a substantial amount of money,” she said.

Uber said it will appeal the ruling immediately.

“Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss,” the company said in a statement.  “As employees, drivers would lose the personal flexibility they value most -- they would have set shifts, earn a fixed hourly wage, and be unable to use other ridesharing apps.”

Independent Contractors

When Chen allowed the drivers in September to press their claims as a group, seeking tips allegedly denied them as independent contractors, he limited the size of the class to what Uber said is less than 10 percent of its California drivers.

Chen’s reexamination of Uber’s 2014 contracts with drivers that required them to resolve disputes through arbitration will likely add tens of thousands of drivers who were excluded from the case in his September ruling. The company has said most of its drivers were hired in the last two years.

“This order will probably increase the size of the plaintiff class many times over, to include the large majority of Uber drivers in California,” Charlotte Garden, an associate professor at Seattle University School of Law, said in an e-mail.

Uber was leaning on a court ruling from August in the fast-changing area of arbitration law to urge Chen to keep the class capped at fewer than 15,000 drivers.

Drivers’ Attorney

Shannon Liss-Riordan, an attorney for the drivers, said Uber will now have to turn over data about its workforce so she can determine how many drivers can join the litigation. She said the case will grow by tens of thousands of drivers.

Chen’s ruling is important because Uber has attempted to use an arbitration clause buried in its user agreements “to shield itself from this type of lawsuit,” Liss-Riordan said.

Garden said unique issues in the case involving California law probably won’t come into play in other lawsuits by workers in the sharing economy challenging their status as independent contractors.

The case is O’Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco).

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