Federal Appeals Court Rules in Favor of Uber in Lawsuit to Keep Drivers as Independent Contractors

On September 25, 2018, the Ninth Circuit Court of Appeal handed over a major victory to the ride-sharing giant Uber Technologies Inc. in a battle between Uber and a class of thousands of Uber drivers alleging they were misclassified as independent contractors. In the lawsuit, the Uber drivers claimed Uber had been successfully skirting labor laws by classifying its drivers as independent contractors rather than employees and alleged that the arbitration clause Uber required its drivers to sign upon hiring was unlawful. A three-judge panel of the federal appeals court voted unanimously to determine that arbitration agreements between Uber and its drivers were lawful and enforceable based on the U.S. Supreme Court’s Epic Systems ruling.

The Impact

The federal appeals court ruling in favor of Uber means that drivers seeking to be classified as employees rather than independent contractors must arbitrate their claims individually and not pursue class action lawsuits. That ruling was upheld by the Ninth Circuit Court of Appeal. So, what’s the big deal?

Class action lawsuits allow people to collectively sue and potentially obtain greater recoveries than if forced to sue individually. There’s strength in numbers, but without a class certification, many individuals will not be able to afford to take on a tech giant like Uber in an individual lawsuit and will likely never get their day in court.

Drivers allege that Uber misclassified them as independent contractors to avoid having to reimburse them for expenses such as gas, vehicle maintenance and other various expenses related to driving a car. Another claim alleged that Uber was not allowing their drivers to keep all of the tips they obtained from passengers. Uber has since faced multiple lawsuits demanding that its drivers be classified as employees, who would then be entitled to minimum wage, overtime and other benefits not afforded to contractors.

Explaining Employment Law

Willful misclassification is the act of a company knowingly misclassifying an employee as an independent contractor for its own benefit. Misclassified employees are often categorized incorrectly when it comes to the terms of their employment, denying them access to benefits, overtime pay and expense reimbursement, as well as other protections employees are entitled to by law. Anyone who believes they have been misclassified as an independent contractor can file a wage claim with the Labor Commissioner’s Office.

What should I do if I feel I’m being treated unfairly as an employee?

Since the Ninth Circuit reversed the district court’s ruling on Uber’s arbitration clause, we urge all Uber drivers or anyone who feels they may have been subjected to employment misclassification to contact us immediately regarding your options. Contact McNicholas & McNicholas, LLP at 866.664.3055 or visit our website for a free consultation.