Court Gives Uber Drivers Green Light for Class Action

Today, a district court granted class certification to Uber drivers alleging they have been misclassified as independent contractors. As discussed in previous posts to this blog earlier this year and last year, the growing sharing economy continues to pose challenges for hard-won worker protections – today’s decision is an important step towards ensuring technological innovation does not undermine important worker protections.

The court’s 68-page order lucidly lays out California’s test for an employment relationship, as stated in S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations (“Borello”), 48 Cal. 3d 341 (1989), and more recently clarified in Ayala v. Antelope Valley Newspapers, Inc., 59 Cal. 4th 522 (2014). Order at 10-13.

Under Borello, whether an employment relationship exists depends on one primary factor and several secondary factors.[1] The “most significant consideration” is the putative employer’s “right to control work details.” Borello, 48 Cal. 3d at 350. The California Supreme Court’s recent decision in Ayala clarified that the “pertinent question under California’s right-of-control test is not how much control a hirer [actually] exercises, but how much control the hirer retains the right to exercise.” Order at 11 (citing Ayala, 59 Cal. 4th at 533 (emphases in original) (citation omitted)).

Importantly, the court concluded that the Borello test can be answered for each Uber driver on a common basis. That is, the central question in the case – whether Uber drivers are independent contractors or employees – can be resolved by reference to common policies, common practices, and common evidence including evidence that Uber uniformly sets its rates for drivers, uniformly monitors drivers’ performance, and uses uniform employment contracts for each of its drivers. Order at 38.

In reaching its decision to certify the class, the court rejected Uber’s argument that individualized issues would bog down the litigation because:

[O]n one hand, Uber argues that it has properly classified every single driver as an independent contractor; on the other, Uber argues that individual issues with respect to each driver’s “unique” relationship with Uber so predominate that this Court (unlike, apparently, Uber itself) cannot make a classwide determination of its drivers’ proper job classification.

Order at 6.

Thus, the fact that Uber itself made a uniform determination in misclassifying its drivers as independent contractors weighed in the court’s holding that such a determination could also be made uniformly by a court or trier of fact. Order at 6 (citing In re Wells Fargo Home Mortgage Overtime Pay Litig., 571 F.3d 953, 957 (9th Cir. 2009)

After an exhaustive review of each factor under the Borello common law employment test, the court held that, “every (or nearly every) consideration under the California common-law test of employment can be adjudicated with common proof on a classwide basis.” Order at 56.

Similar lawsuits have been filed against other app-based companies such as Lyft. See Cotter v. Lyft, Inc., 13-cv-4065-VC (N.D. Cal.). Moreover, the Department of Labor has recently released guidance reaffirming the basic principle that “most workers are employees under the FLSA’s broad definitions.” In light of these legal developments, companies that have benefitted from the fast-growing sharing economy should reevaluate their employee classification decisions.

For example, Instacart, a company that provides online grocery deliver services, recently reclassified its workforce, citing the positive business benefits of maintaining employees rather than independent contractors. Similar companies that seek similar benefits from independent contractors face the real possibility of expensive legal action.

In you have concerns that you may have been misclassified in your job please contact Bryan Schwartz Law.

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[1] The secondary factors are:

(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

(c) the skill required in the particular occupation;

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(e) the length of time for which the services are to be performed;

(f) the method of payment, whether by the time or by the job;

(g) whether or not the work is a part of the regular business of the principal; and

(h) whether or not the parties believe they are creating the relationship of employer-employee;

(i) the alleged employee’s opportunity for profit or loss depending on his managerial skill;

(j) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers;

(k) whether the service rendered requires a special skill;

(l) the degree of permanence of the working relationship; and

(m) whether the service rendered is an integral part of the alleged employer’s business.

Borello, 48 Cal. 3d at 351, 354-55.