On April 21, Uber and plaintiffs’ counsel announced settlements of class litigation in California and Massachusetts, in which Uber drivers contended that they were employees and not independent contractors. Uber takes the position that it simply provides a “virtual-matching service” for drivers and riders, and is not the employer of the drivers.
The deal between Uber and the 385,000 drivers in the classes involves a structured settlement, under which Uber could pay out as much as $100 million. The drivers, with possible funding from Uber, may form statewide associations to deal with Uber regarding driver issues. Uber also has announced that it is making some changes in the terms and conditions of the contractor relationship that are expected to address some of the attributes of “employee” status about which the drivers complained in the lawsuits. Among other changes, Uber will allow drivers to post signs about tips, and will be more lenient with its rules providing that drivers will be deactivated for refusing to provide rides.
What does the $100 million buy for Uber? In the short term, it’s getting peace with respect to the two class actions in jurisdictions that are not always friendly to employers’ interests. Moreover, the drivers have apparently agreed that Uber may continue to classify them as independent contractors. But Uber is not out of the woods, given that federal, state, and local regulators, as well as drivers in other states, are not part of the settlement. For example, NLRB General Counsel Richard Griffin recently issued a memorandum indicating that he wants all NLRB cases involving independent contractor misclassification to get priority treatment and review by the NLRB’s Division of Advice. Likewise, the U.S. Department of Labor Wage and Hour Administration has issued tough guidance on independent contractors versus employees. Meanwhile, the California Development Department has determined that an Uber driver is entitled to unemployment benefits. (Uber apparently has sought review of the California decision.) In Seattle, the city government enacted an ordinance that allows independent-contractor-for-hire drivers to form unions. In response, the U.S. Chamber of Commerce sued the city, asserting federal preemption of local and state laws by federal labor and antitrust law. And on April 22, one day after news of the California and Massachusetts settlements was released, drivers in Florida brought a putative collective action under the Fair Labor Standards Act. The Florida drivers, whose suit is pending in federal court in Miami, seek nationwide relief and classification of the drivers as employees.
Could it get any more complicated for Uber? Yes. Also on April 22, the Teamsters union announced plans to form an association of ride-share service drivers in California. If the association or any other gets support from Uber (under the terms of the settlement or otherwise), and if the drivers are ultimately determined by the NLRB to be employees rather than independent contractors, then there could be issues regarding support of a labor organization by an employer. This is unlawful under Section 8(a)(2) of the NLRA.
So it seems that Uber – as well as entities with similar business models – may be whacking one mole, only to have seven other moles pop their heads up elsewhere.