Uber Technologies Inc. faces a new legal attack on its refusal to treat drivers as employees that depicts the company as mistreating not just them but the public at large.
A lawyer who’s been fighting the ride-hailing giant in court for six years wants a judge to now take into account the extra costs saddled on California taxpayers by Uber’s business model.
Drivers being cheated out of wages and not being reimbursed for expenses causes California to lose out on payroll taxes, attorney Shannon Liss-Riordan said in an interview. Uber also avoids paying premiums for workers compensation, Social Security, unemployment and disability insurance, and public assistance for drivers who can’t support themselves, she said.
The company has warned that attempts to convert its drivers from independent contractors to employees under California’s recently passed AB 5 law, which goes into effect Jan. 1, will be handled as they always have: by its armies of lawyers in courtroom combat. For good measure, Uber is pouring tens of millions of dollars into a 2020 California ballot initiative in an attempt to shield its drivers from the law.
Uber says the driver Liss-Riordan is representing, Thomas Colopy, can’t show its labor model causes him “irreparable harm.” His request for the company to be forced to reclassify drivers “does not serve the public interest, but rather only his own,” Uber said in a court filing.
Uber and Liss-Riordan faced off Thursday at a hearing before the same federal judge in San Francisco who handled one of their previous battles that ended in a $20 million settlement without any change to the company’s business model. U.S. District Judge Edward Chen expressed skepticism about the demand that Uber immediately reclassify its drivers but declined the company’s bid to dismiss.
A Seattle University law professor who follows these legal fights closely says this one is a long shot. “But that doesn’t mean it’s not a shot,” said Charlotte Garden. With the passage of AB 5, “Uber drivers are getting much closer to the goal of courts declaring them employees under California law.”
Liss-Riordan, based in Boston, has taken multiple shots at Uber and the gig economy broadly, arguing its model is built on cheap labor and legal end-runs around decades of hard-won protections for workers.
AB 5 says workers can generally only be considered contractors if they perform duties outside the usual course of a company’s business. Legal experts say the law weakens Uber’s argument that its drivers are independent contractors, and even the company acknowledges the law creates a higher hurdle.
Liss-Riordan said the law gives her new complaint a legislative ”stamp of approval.”
“It emphasizes the fact that the state of California has recognized misclassification is a public harm,” she said. “The whole state of California understands that AB 5 was passed in order to stop Uber and the rest of the gig economy from misclassifying its workers.”
Uber argues that while Colopy’s “purported injury” could be fixed with monetary damages, the company would be required by the so-called public injunction he seeks “to change its entire business model.”
The company also stands by its argument that it’s not a ride-share company and that drivers are peripheral to its central mission.
“Uber is a technology company, and therefore operates no vehicles and provides no tools or equipment.” Drivers and riders use its application, Uber argues, “to create a business connection.”
Garden said that under AB 5, state or local officials may be in a better position than Liss-Riordan to pursue a public injunction.
“There is a public policy question facing all of us about what we demand from employers -- whether we agree that any working conditions that an employer can get an employee to agree to are acceptable, or if we demand some minimum standards,” she said.
The case is Colopy v. Uber Technologies Inc., 19-cv-06462, U.S. District Court, Northern District of California (San Francisco).