Uber, the company that has rapidly grown by overhauling the taxi industry across the country, is now facing a nationwide class action based on its relationship with the hundreds of thousands of drivers who earn an income from driving its customers. The lawsuit, filed in the Northern District of Illinois, argues that Uber’s drivers have been misclassified as independent contractors by the company, and should have properly been treated as employees. Uber, which has faced repeated complaints from drivers over unfair working conditions, only recently settled two major class action lawsuits in California and Massachusetts over the same issues, and agreed to, among other things, pay $100 million in damages to drivers.
Plaintiffs Claim Drivers Are Owed Unpaid Wages and Expense
The Illinois suit, brought by Uber driver Lorri Trosper on behalf of all Uber drivers other than those in California and Massachusetts, claims that Uber is required to pay all such drivers unpaid wages they should have received for working overtime and “off-the-clock” hours, reimbursement of work-related expenses, and “payment of all gratuities that were earned but stolen by Uber or were lost due to (Uber’s) communications and policies” – essentially arguing that Uber discouraged tips that Uber drivers should have lawfully been allowed to receive.
At the heart of the complaint is the allegation that Uber improperly classified its many thousands of drivers as independent contractors when Uber actually treated them as employees. The important distinction is that, while employees are subject to a whole host of state and federal protections, including wage and hour laws (including minimum wages and overtime requirements), reimbursement of expenses, and provision of employee benefits, an independent contractor is not entitled to those same protections and benefits and therefore, if that was truly the case, Uber was not required to provide them.
Nationwide Class Action Mirrors Cases in California and Massachusetts
While the nationwide class action is being brought pursuant to the federal Fair Labor Standards Act, the underlying allegations are essentially identical to those brought in the Massachusetts and California class actions. Uber settled those cases by getting the plaintiffs representing the drivers in those states to agree to remain independent contractors in exchange for up to $100 million in payments (split among 385,000 drivers). The company also agreed to a change in policies by no longer penalizing drivers for declining trips and providing increased transparency to drivers about their internal ratings.
The Independent Contractor v. Employee Argument
For California workers, the ongoing Uber lawsuits highlight an important issue that is becoming more and more common in our freelance society. Many tech-driven companies prefer to use the independent contractor model, because doing so can save them immense costs in not having to provide benefits such as insurance and not being subject to overtime and other wage laws. But simply calling a worker an independent contractor does not make them so if the relationship more resembles that of an employer-employee.
In her complaint, Trosper argues that, “Despite Defendants’ position that Uber’s drivers are independent contractors, Uber tells the drivers what price to use, pays the driver directly from fares collected from the customer, makes direct deposits in the drivers’ bank accounts, provides the drivers with a pay statement, monitors the drivers’ number of trips and hours on line and tracks their acceptance rate and driver rating. In addition, the drivers are under agreements with Uber that direct and define their duties, responsibilities and other employment related issues.”
While employment laws vary state-by-state, it is the case generally that the more a company directs how a worker perform his or her work and restricts their conduct, the more likely a court might be to view them as an employee, entitled to employment rights under state and federal law.
If you believe you have been misclassified as an independent contractor and denied your rights as an employee, the complex litigation attorneys at McCune Wright Arevalo may be able to advise you on your rights under California and federal law. Contact us today to schedule a consultation.