Law360: Uber Should Finally Admit It Has Employees

A California trucking company unlawfully misclassified its drivers as independent contractors, the National Labor Relations Board ruled earlier this month. Meanwhile, in a federal courtroom in New York City, lawyers for Uber unleashed a barrage of attacks seeking to get a proposed class action arguing its drivers are employees dismissed. Separately, Uber lawyers filed a motion seeking to force the issue into arbitration.

The moves by Uber in New York are just the latest attempts by the ride-sharing behemoth to distance itself from the very drivers that make its billions in revenue possible. At last count, Uber was fighting more than 50 lawsuits, dozens of state unemployment and workers’ compensation claims, and a seemingly interminable slew of private and secret mandatory arbitrations it requires of its drivers who claim they aren’t actually running their own businesses as independent contractors. And that’s just in the U.S. The transportation company has settled and tried to settle many of these, by ponying-up millions of dollars in damages, unpaid wages and insurance premiums, while persisting in its claim that its drivers aren’t its employees.

The stakes — for Uber, but especially for its drivers — are high.

So far, none of these lawsuits or state agency actions against Uber has resulted in an order requiring it to act as an employer of the millions of drivers who provide their labor, despite broadly-scoped laws and facts that point inevitably towards employee status of the drivers.

But the California decision denying a proposed class settlement for Uber drivers is a sign that regulators are zeroing in on misclassification. And an innovative campaign by the New York Taxi Workers Alliance (NYTWA) and its member-drivers could produce similar results, despite desperate attempts by Uber’s lawyers to have the proposed class action thrown out. With its long-standing membership among drivers in the New York yellow and green cab, black-car limousine and more recently Uber and Lyft drivers, the American Federation of Labor and Congress of Industrial Organizations-affiliated NYTWA has industry knowledge and deep roots organizing and representing drivers before the New York Taxi & Limousine Commission and a number of other regulatory agencies. NYTWA has deployed traditional tools of litigation, agency advocacy and organizing in a strategic trifecta that may finally force Uber to accept responsibility for its drivers.

You may wonder why Uber insists on calling its drivers independent contractors when worker protection laws and the objective facts suggest otherwise. Because of Uber’s twin obsessions. Obsession No. 1: Like agricultural growers, janitorial cleaning companies, strip club operators and construction drywall companies who contend they have no employees, Uber religiously avoids the E-word in order to skirt workplace or tax requirements, saving billions in the process. Obsession No. 2: It keeps any legal assessment of its first obsession out of the courts and in private, secret arbitrations that must be handled one driver by one.

First, Let’s look at the facts. Court filings, agency testimony and driver surveys show Uber drivers: do not set fares, cannot accept tips, must accept rides from and to anywhere Uber says when swiped into the app, must purchase or lease a car (usually from an Uber-backed dealer) that comports with strict specifications and whose payments are automatically deducted from drivers’ pay, agree to GPS monitoring by Uber, and risk being “deactivated” if they get poor passenger ratings or don’t comply with the company’s rules.

Any businessperson running his or her own shop can pass along increases in gas prices or tolls or state or city fees that are imposed to make ends meet. Uber drivers cannot. A business owner typically invests capital and specialized skill into the business, against which she can earn a profit (or suffer a loss); Uber drivers can only make more money by working longer hours. The drivers perform tasks for Uber that are intrinsically what Uber is selling: a ride from one point to another when the passenger wants it. Without the drivers, Uber would not exist as a transportation company. Under broadly defined minimum wage and overtime laws, and other labor and employment protections, Uber drivers are not in business for themselves — they are employees of Uber.

Second, Uber requires its drivers to “agree” to mandatory, private arbitrations to resolve any work dispute. These arbitrations are secret, create no precedent, and cannot be handled on a class or group basis. A handful of drivers in a high-profile California Uber class litigation got some mandatory arbitration requirements for a few months period tossed, but the judge’s recent refusal to accept the $100 million settlement for that case puts the mandatory arbitration argument right back on the table, and Uber is hoping for a Ninth Circuit Court win, which would throw many of the drivers’ claims into one-by-one private arbitrations and out of the federal courts.

Uber is banking on the fact that forced individual arbitrations outside of the public and other drivers’ eyes will mean more wins, lower monetary settlements, fewer claims overall because of barriers to getting attorneys willing to take individual cases, and, most importantly, no order from any court telling Uber to comply with labor and employment laws by calling the drivers employees.

And while Uber now permits its drivers in some cities to opt-out of its mandatory individualized arbitration provisions after getting some heat from the California case, many drivers simply swipe in and inadvertently accept the arbitration limitations, much as most of us “agree” to nonnegotiable terms and conditions when renting a car, signing into Facebook or ordering baseball tickets. Uber’s twin obsessions are working to shield its business model, so far.

Enter the Taxi Workers Alliance and its members. Since June, NYTWA has filed two mostly under-the-radar federal cases and a potentially groundbreaking National Labor Relations Board claim — all backed by old-fashioned worker organizing. The federal class and collective action lawsuit for unpaid wages for 35,000 workers in the Southern District of New York seeks a ruling that Uber drivers are employees for purposes of federal and state minimum wage and overtime protections.

Unlike other similar lawsuits filed around the country, NYTWA is itself a party plaintiff to the lawsuit, meaning that any settlement or trial adjudication will have to take into account its institutional interests, in addition to those of individual driver plaintiffs and claimants. Second, its claim with the National Labor Relations Board against Uber’s misclassification of its drivers as independent contractors and its forced private individualized arbitration provision also include NYTWA as a charging party, giving it standing to accept or not any settlement entered into around those claims. Because NYTWA never swiped into the Uber app agreeing to its individualized arbitrations, it cannot be forced into the secret private arena of arbitrations.

And finally, the NYTWA filed a lawsuit against Gov. Andrew Cuomo and the New York State Department of Labor on its behalf and on behalf of a pair of drivers for the NYS DOL’s admitted failure to adjudicate unemployment insurance claims by Uber drivers in New York. In that case, the drivers filed claims for unemployment insurance when they were “deactivated” by Uber, and the New York State DOL failed to make any determinations on their claims after up to 10 months, telling the claimants in an email that all Uber unemployment claims were under “executive review” by the governor.

Uber’s twin obsessions and willingness to pay out hundreds of millions of dollars in public and private settlements will not ultimately preserve its business model. Labor law and, now, NYTWA’s legal push on behalf of its members should ultimately compel the company to admit it has employees. Uber could wait for a ruling against it like the one against the California trucking company this week, or it could do the right thing and admit that its employees are actually its employees.

Catherine Ruckelshaus is general counsel and program director at the National Employment Law Project in New York. 

Read the original op-ed at Law360.

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