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Uber Judge Balks at Making Drivers Employees, for Now

  • Lawsuit aims to use California AB 5 to change drivers’ status
  • Arbitration looms but drivers’ ‘plausible’ claim advances
Uber Technologies Inc. App-Based Transportation Ahead Of Earnings Figures
Photographer: David Paul Morris/Bloomberg
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Uber Technologies Inc. beat back an aggressive bid to force it to treat California drivers as employees, but a judge’s ruling may allow a long-running fight over pay and benefits to gain traction in 2020.

U.S. District Judge Edward Chen declined Monday to order Uber to instantly convert drivers in its home state from contractors to employees based on an argument that it’s cheating not just workers but also the public at large.

But the San Francisco judge also refused to throw out the case, an early test of a California law aimed at gig economy companies that’s set to take effect Jan. 1. In what may turn out to be a significant threat to Uber’s business model, Chen concluded the case presents “a plausible claim that any misclassification by Uber is willful.” Uber declined to comment on the ruling.

AB 5, signed by California Governor Gavin Newsom in September, says workers can generally only be considered contractors if they perform duties outside the usual course of a company’s business. Legal experts say the law weakens Uber’s argument that its drivers are independent contractors, and even the company acknowledges the law creates a higher hurdle.