September 4, 2015 Kim Krisberg 0Comment

The ride-hailing mobile app Uber is desperate to prove it’s nothing more than a technology platform that connects drivers and passengers. As long as it can classify its workers as independent contractors, it can sidestep a whole host of labor and wage laws. But a court ruling issued earlier this week could open the door to change all that.

On Tuesday, a federal judge in San Francisco granted class action status to a lawsuit challenging Uber’s classification of workers as independent contractors. The decision doesn’t rule on the question of whether Uber drivers should be classified as employees, given the significant control Uber wields over their day-to-day work. Instead, the ruling clears the way for the case to go to trial — a case that may involve up to 160,000 Uber drivers in California. If drivers are ultimately able to prove they deserve employee status, Uber — which was recently valued at more than $50 billion — would have to begin abiding by traditional labor laws, such as having workers’ compensation insurance, reimbursing drivers for work-related expenses such as gas and tolls, and paying Social Security taxes.

But even though this week’s ruling doesn’t decide on the question of worker classification, the judge in the case — San Francisco Federal Judge Edward Chen — included some sharp and insightful rebuttals to Uber’s argument that it’s little more than an app on your smartphone. Here are some of the most interesting passages from Chen’s class action status ruling.

In addressing Uber’s control over drivers with respect to setting prices, Chen writes:

Uber suggests that it “uses ‘surge pricing’ as a form of negotiation to bid up compensation and entice drivers to log in and accept ride requests.” Even if true, this is not evidence that Uber does not unilaterally maintain the right to control it [sic] drivers’ compensation, or that drivers can actually negotiate over their compensation with Uber. The evidence is undisputed that, as with its “normal fares,” the “surge pricing” fare is unilaterally set by Uber, not by individual drivers — there is no “negotiation” between Uber and Uber drivers over fares. If Uber wants to raise prices, it raises prices. If Uber wants to lower prices, it lowers prices. Put simply, it is Uber that sets the price, and drivers either accept Uber’s offered piece rate or do not.

Uber’s alternative suggestion similarly misses the mark. Uber suggests that drivers have the power to negotiate their own fares with riders because they can turn off the Uber application before a ride is complete. …to suggest that Uber drivers’ alleged right to turn off the meter before a ride is over — which right, by the way, Uber seems to admit is uniformly possessed by all Uber drivers — is proof of the drivers’ power to negotiate their compensation with Uber is incorrect: The fact that an Uber driver can theoretically negotiate with her passenger to accept a lower fare than that passenger would otherwise be charged says nothing about that driver’s power to negotiate fares with her putative employer — Uber.

On the issue that drivers feel liberated from traditional workplace confines and would rather be classified as independent contractors, Chen writes:

First, while Uber claims that “countless drivers” hail the firm as a “liberator” from traditional employment, Uber has only submitted evidence of the beliefs of a small fraction of its California drivers: 400 out of 160,000 (i.e., 0.25%). Notably, even out of these 400 declarations, Uber identified only about 150 where the driver actually stated that she prefers to remain an independent contractor. There is simply no basis in the record supporting Uber’s claim that some innumerable legion of drivers prefer to remain independent contractors rather than become employees.

Moreover, not only are the expressed views of these 400 drivers a statistically insignificant sample of the views of their fellow drivers and class members, there is nothing to suggest (and Uber does not contend) that these 400 drivers were randomly selected and constitute a representative sample of the driver population. Nor is there evidence that the responses of these drivers were free from the taint of biased questions. Nothing suggests, for instance, that they were told that were the Plaintiffs to prevail, they might be entitled to thousands of dollars. More fundamentally, the views expressed have little probative value to the question at hand. As the Court noted at the hearing on Plaintiffs’ motion, it has doubts that most Uber drivers or declarants correctly understand the pertinent legal differences between being an employee and an independent contractor, or the potential consequences of this lawsuit.

Finally, Chen writes about the larger implications of the worker classification question, citing fellow judges:

… where putative employees seek to invoke the protections afforded under California labor laws, the Court “must be mindful” of the fact that “‘the protections conferred by [these laws] have a public purpose beyond the private interests of the workers themselves.’” (noting as a public policy matter that “[m]isclassification also results in lower tax revenues for government and an uneven playing field for employers who properly classify their workers”). “It would be antithetical” to the public interest embodied in California’s Labor Code to permit a statistically insignificant portion of Uber’s workforce “to frustrate the attempt by others to assert rights under California labor law solely because [they] are satisfied with their current jobs.”

The current class action suit against Uber is part of a larger wave of backlash against mobile app-based companies that assert major control over their workers and yet refuse to recognize them as employees. If Judge Chen’s words are any indication, the flexibility that Uber and its peers offer workers may soon come with a big dose of fairness as well. Click here to read Judge Chen’s ruling in full. Or visit Mother Jones and The New York Times for more coverage.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade.

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