SAN FRANCISCO — The question of how large the lawsuit concerning Uber drivers’ employment classification will be has to wait for another day.
In a crowded San Francisco courtroom Thursday, US District Judge Edward Chen postponed a ruling on the status of a lawsuit against Uber over whether drivers should be considered employees rather than contractors. The next hearing in the case is scheduled for November, but a ruling could be issued before then.
At issue is whether the suit can be widened into a class action, potentially raising the number of people suing Uber to more than 160,000 drivers. The case was originally filed by three drivers who say Uber wrongly classified them as independent contractors rather than employees, potentially keeping them from earning benefits, workers compensation and unemployment.
“Uber has made a decision that all 160,000 drivers in California are independent contractors,” Shannon Liss-Riordan, the plaintiff’s head attorney, said Thursday. “It said that across the board. So in order for there to be a real way for that issue to be addressed and vindicated is through a class action.”
Uber representatives did not make themselves available to the press after the hearing.
The case could have far-reaching implications. Whether three or 160,000 people ultimately sue Uber, the case questions the way Uber does business and just how valuable — and ultimately successful — the company can be. Should Uber lose the suit, the company would likely have to turn its drivers into employees, meaning they would be entitled to unemployment, workers’ compensation and health insurance. They’d even have the right to unionize.
Uber, which is a ride-hailing service that pairs passengers with drivers via a smartphone app, is one of the world’s most valuable startups. Since the San Francisco-based company launched in 2009, it’s grown to operate in more than 250 cities in 58 countries. Uber is also one of the highest-valued venture-backed companies in the world with a valuation of more than $50 billion by some estimates.
Uber’s current classification of drivers as contractors means it’s not responsible for all sorts of costs, including Social Security, health insurance, paid sick days and overtime. Drivers also supply and maintain their own cars, so Uber doesn’t pay for gas, repairs and other related expenses.
On Thursday, Chen said he still needs time to consider some issues regarding facts around the plaintiffs and potential class members of that 160,000.
If Chen decides to grant class status in this case, Uber will have to contend with more than 160,000 Uber drivers in California, rather than just the three drivers listed on the complaint now. That means if Uber loses the case, it would have to pay damages to all of those drivers.
It’s not just Uber that’s affected, however. The decision could also have broader implications for the “on-demand” economy — and companies like ride-sharing competitor Lyft, errand helper TaskRabbit and others. The result is that an entire swath of the technology industry, which has been built on cheap independent contractors may need to incur increased costs as they become full-fledged employees.
Chen said he still needs time to consider some issues regarding facts around the plaintiffs and potential class members of that 160,000.
Uber attorney Theodore Boutrous argued each of those drivers is an individual person, and the proposal to rope them into the same class “tosses out the window the claims of many people.”
“The best thing here is to take it one step at a time,” he said. “And 160,000 at once is a risky gamble for the system.”
“If you were confident in your case,” Chen responded, with his head resting in his palm. “It would be a good gamble.”
The case’s next hearing is November 19.
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