Uber Drivers Granted Class Action Status in Closely Watched Case

A California federal judge recently certified a class of Uber drivers who are seeking employee status. The Court’s ruling in O’Connor et al. v. Uber Technologies, Inc. et al. could potentially reshape the emerging “sharing economy,” which is based upon technology platforms enabling users to arrange and purchase services from third-party providers of such services.

In March of 2015, we reported on the O’Connor case, which is venued in the U.S. District Court in San Francisco. The Uber drivers in O’Connor claim that, although Uber classifies them as independent contractors, they are actually employees and are therefore owed certain benefits, reimbursements, and protections. Whether an Uber driver is an independent contractor or an employee is of great consequence to Transportation Network Companies (“TNC”), such as Uber, and the sharing economy as a whole, as California labor laws confer many protections on employees, while independent contractors receive minimal protection. The issue is also of great consequence for purposes of vicarious liability. Whether TNC drivers are considered employees or independent contractors is determinative as to whether TNCs can be found vicariously liable for their drivers.

On March 11, 2015, the O’Connor Court ruled whether an Uber driver is an employee or independent contractor is a question for the jury. Thereafter, on September 1, 2015, the O’Connor Court ruled the Uber drivers could sue as a group on the question of whether they are employees or independent contractors. As a result of the ruling, the class action suit could potentially cover more than 160,000 California drivers.

TNCs and the sharing economy in general rely on the independent contractor model to provide a cheap and flexible workforce, and to avoid considerable operating costs and tax obligations associated with employees. If the O’Connor jury ultimately decides that the drivers are employees, the TNC business model will be dealt a significant blow.

The California legislature has drafted legislation governing the TNC industry without creating logistical challenges that might stifle the new and beneficial marketplace. However, until the legislature enacts laws tailored to the unique sharing economy,

California juries will play a significant role in shaping the future of an entire industry. For these reasons, the O’Connor case will no doubt be closely watched in California and beyond.

Morgan Van Buren is an associate at Tyson & Mendes LLP. He specializes in personal injury and high net worth insurance issues. Contact Morgan at 858.263.4107 or mvanburen@tysonmendes.com.

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