Earlier this week, a California Labor Commissioner ruled that a Uber driver should be considered an employee, and was owed thousands in compensation. But it’s not the blow to the sharing-economy the media is making it out to be—and could even help them in future class-actions.
According to the ruling, Uber owes Barbara Ann Berwick $4,152 in expenses and other costs that she amassed while she was misclassified as an independent contractor for Uber last year. Despite the app-company’s insistance that they are merely facilitators, the California Labor Commissioner’s office found they wield a lot more employment control than they let on.
“The defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” the commission said in the decision, filed alongside Uber’s appeal notice. “The reality, however, is that defendants are involved in every aspect of the operation.”
Of course, as most lawyers know, this case won’t exactly set anti-on-demand company precedent in Uber’s future legal battles. The labor commissioner’s decision is a one-off, binding decision in favor of one employee against Uber—and one that Uber is appealing. But many still see this as a big win for Uber’s drivers, as The New York Times reports:
The ruling does not apply beyond Ms. Berwick and could be altered if Uber’s appeal succeeds. Uber has also prevailed in at least five other states in keeping its definition of drivers as independent contractors. Yet the California ruling stands out because officials formally laid out their arguments for why Uber drivers are employees. That could bolster class-action lawsuits against the company in the state. California law expressly requires employers to reimburse employees for business expenses and several suits proceeding against Uber are based on that state law.
“I read some article that said this decision will affect their $50 billion evaluation, and I don’t know how people are getting that idea. It will effect Uber to the tune of that [$4,152] dollars, but it will have no impact on the company for other drivers,” said Zaller.
This isn’t a finding that another driver could walk into court with and hope to apply to their case; according to Zaller it doesn’t carry over like that. A class-action like the one pending in California could hold that kind of weight, but Zaller thinks that a case like this could also help Uber’s defense.
As Uber noted in their press release following the decision, this isn’t their first rodeo. And though opponents pointed out that just last month in Florida a similar case was decided against the ride-sharing giant, Uber has claimed victories in cases like these in Georgia, Pennsylvania, Texas, Colorado, and Illinois. Not to mention a 2012 California labor commissioner case where Uber won.
This is far from the first time Uber has defended itself in court, and it’s also not the first time Uber has lost its fight. When you add all those up, they could create a pattern that doesn’t hold up with a class action.
“It could help Uber to say ‘look at all these individualized issues that came up in this one case; look at how many facts came into play. This is why we can’t have this as a class action,’” said Zaller. “That’s how individualized this is. And if you’re getting different rulings out of the same commissioner’s office it falls right into Uber’s argument…Even if they lose this one but won in other offices, they can point to that when fighting off class actions, that they get different rulings all the time and can’t try on a class wide basis.”
Given that the first determination of any class-action is whether there’s more common issues than not, in Zaller’s eyes this could be a way Uber could stake a claim to get rid of the class-action being leveled against them. Even if the class-action against Uber is certified, Zaller notes it’s possible that Uber could still win on the merits that their drivers were properly classified given that it’s essentially uncharted territory.
Obviously there’s still a long road ahead of Uber in terms of proving their classification. The case at the center of all this could be worth billions, but neither this decision nor the appeal is what is ultimately going to bring down Uber’s “house of cards.” And after all is said and done, it may not even be the roadblock people think it is.