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NYC Litigation Blog

Tuesday, September 8, 2015

Federal Judge Grants Class-Action Status to Uber Drivers Relative to Employment Classification

Should Uber drivers be considered employees or contract workers?

A recent decision by a federal judge has granted class-action status to a lawsuit that challenges the employment classification of Uber drivers. This ruling paves the way for a jury to examine the case and decide whether some Uber drivers should be considered employees, rather than 1099 contract workers as they now are.

This case, filed in 2013, has enormous implications relative not only to the multi-billion dollar Uber company itself, but to other companies using Uber as a business model.  At issue in this case are employer responsibilities relative to workers and their vehicles.  As it stands now, in some states Uber is not required to:

  • Pay payroll taxes
  • Apply minimum or overtime laws
  • Provide employee health insurance
  • Provide maintenance of vehicles

Although legal experts agree that this case is not likely to be decided any time in the near future, this recent Federal District Court  ruling means that the case can go forward. If and when the class action suit goes against Uber, the bottom line of the company will be tremendously impacted.  If it is ruled that most Uber workers (160,000 at present) are "employees," deserving of all the rights adhering to that designation, Uber will be required to provide its workers with typical employee benefits and its phenomenal profit margin will decrease sharply. As a result, the company will no longer be in a position to pass on the extremely high profits to its investors it now does.

It is not only Uber's profits or the benefits of its employees that are at stake in this legal wrangling. Passenger safety is also an issue that has to be taken into consideration. There are two aspects to passenger safety.  One involves background checks on drivers;  the other concerns adequate mechanical maintenance of vehicles.  Uber, in addition to its other legal challenges, is now facing lawsuits that question the safety of the rides it offers.

Very recently, the district attorneys of San Francisco and Los Angeles asserted  that background checks used by Uber are inadequate, failing to uncover the criminal records of 25 drivers in those two cities. In an even more disturbing case, an Uber driver in India was brought up on charges late last year of having raped a passenger and then accused  of having raped another years before. Although the driver was acquitted of these charges, Uber's process for screening drivers continues to raise international concern.

Questions concerning employment law continue to be important issues in the media and in our own lives.  If you have questions or difficulties involving employment or business litigation, please contact one of the skilled attorneys at Thomas M. Lancia for expert legal guidance and representation.  Serving clients throughout New York City, we can be reached at 212.964.3257.


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