On March 9, 2009, the ridesharing company Uber took the gig economy by storm when it officially launched in San Francisco, CA. Today, the “modern-day taxi” business has operations in over 785 cities and over 110 million users worldwide.
Unfortunately, the company’s 10th year anniversary isn’t much of a celebration, as reports indicate that Uber lost $1 billion in the first three months of 2019. What’s worse is that over 30 of its current and former drivers are suing the company for employee misclassification.
Drives Claim They Are Not Contractors
Uber drivers filed a class-action lawsuit in a San Francisco federal court on Wednesday, claiming that they should be considered 1040 employees rather than 1099 contractors. The drivers allege they have little to none of the flexibility or control that normally comes along with being characterized as a contractor.
Ronaldo Zambrano, one of the attorneys involved in the lawsuit, believes the Uber drivers deserve to be treated fairly and that the court needs to intervene if the company plans to continue neglecting its workers.
“These drivers have devoted their efforts to making Uber the powerhouse it is today. If Uber won’t treat its drivers the way they deserve, then the court needs to step in to enforce the law.”
LA Uber driver Christine Tringali described her working relationship with Uber in a statement released by her lawyers: “We live in constant uncertainty. Uber controls almost every aspect of our jobs but doesn’t care enough about our lives to give us the basic benefits most employees take for granted.”
ABC Test of the Dynamex Ruling
In 2018, the California Supreme Court passed the Dynamex Ruling, which laid out the criteria that must be met in order for an employer to classify a worker as a contractor. According to what the document considers the ABC test, the following conditions must be met:
- “The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.”
- “The person performs work that is outside the usual course of the hiring entity’s business.”
- “The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
According to drivers, none of the above criteria is being met. As a result, they are seeking employment status from Uber including benefits, higher pay, and PTO.
Ramifications for Uber if Lawsuit Is Approved
Uber is confident it can continue running “business as usual,” in which its drivers are contractors while still abiding by the law. The company claims it is offering better benefits such as medical leave and “a guaranteed minimum earnings standard.” It also denies that the drivers are a “core part” of its business model.
If the outcome of the lawsuit in California is unfavorable towards Uber, other states such as New York may also proceed with adopting their own legislation to protect contract workers in the gig economy. It’s quite possible that losing this class-action lawsuit may severely cripple or even dismantle Uber and the ridesharing industry.