Date Set for Trial That Could Imperil Uber, June 2016
The trial for a class action lawsuit that could categorize Uber drivers as employees, which could have devastating economic effects on the ride-hailing company, has been set for June 20, 2016, according to the law firm representing the plaintiff in O’Connor vs. Uber Inc.
The plaintiff argues that because Uber dictates certain working conditions, such as the cost of the fare, the company is obliged to treat its drivers as employees, who are entitled to benefits like health and unemployment insurance. Uber maintains that its drivers are independent contractors because it doesn’t set terms that are usually controlled by the employer, such as working hours.
If the judge rules against Uber and classifies its drivers as employees, the company stands to lose hundreds of millions a year. A Recode/ZenPayroll analysis from earlier this year estimates that Uber would have to spend $209 million annually if its 45,000 Californian drivers are classified as employees.
California isn’t the only state where Uber drivers could be reclassified. Last month, Oregon’s Bureau of Labor and Industries issued an advisory concluding that Uber and Lyft drivers should be treated as employees.
Uber has campaigned hard against these efforts, and argues that such a move could potentially entail standardizing hours for drivers. If that happened, it could force a large bloc of drivers, many of whom are low-income and use Uber as a short-term monetary stop-gap, to stop driving for Uber altogether.
“As those markets become larger than even we imagined, we’re discovering that platforms like Uber are boosting the incomes of millions of American families. They’re helping people who are struggling to pay the bills, earn a little extra spending money, or transitioning between jobs,” Uber’s political strategist David Plouffe said in a discussion at the D.C. tech incubator 1776 on Nov. 3.
Plouffe added: “One of the key attractions of the platform is that you don’t need to make a long-term commitment. On average, half of all drivers in the United States drive fewer than 10 hours a week. … This is crucial: for most people, driving on Uber is not even a part-time job … it’s just driving an hour or two a day, here or there, to help pay the bills.”
Other companies have shuttered their services altogether because of threats of reclassification. Homejoy, the “Uber for housekeeping” startup, closed its doors in July, citing the cost of a lawsuit from ex-housekeepers who said that they were treated as employees, but had only received the benefits of independent contractors.