Uber Technologies, Inc. is facing a proposed class action lawsuit out of California that claims the rideshare company defied state law by misclassifying drivers as independent contractors and failing to pay all wages owed.
Because of the misclassification, the case says, Uber drivers are denied the minimum wage, as well as proper time-and-a-half overtime pay. The suit additionally alleges that Uber uses drivers’ independent contractor status as an excuse to withhold compensation for business expenses, such as car maintenance and gas, and fails to provide itemized wage statements that include all information required under state labor laws.
The case claims that, according to a recent bill passed in California, Uber drivers should be classified as employees rather than independent contractors, which would entitle them to minimum wage, overtime and other benefits outlined under state law. According to the complaint, the California Supreme Court’s decision in Dynamex Operations West v. Superior Court of Los Angeles (Dynamex) and the passage of Assembly Bill 5 (AB 5), which codifies the decision, set stricter standards for independent contractors that Uber drivers do not meet.
Under Dynamex standards, the case explains, independent contractors must be free from company control, perform work outside the company’s normal course of business, and be independently established in the trade in which they are contracted to work.
The case contends, however, that Uber maintains a level of control over its drivers by subjecting them to “a litany of policies and rules” and setting certain professional requirements. Some of these requirements, the suit explains, are that drivers must accept a certain percentage of ride requests, maintain a high customer satisfaction rating, and take the routes Uber determines to be most efficient. Uber also independently determines rates of pay and reserves the right to terminate drivers who fail to meet its policies or standards, the case claims.
Furthermore, the complaint argues that not only are drivers performing work directly in line with the company’s normal course of business, but also that Uber would have no business at all without its drivers. From the case:
“Drivers perform a service in the usual course of Uber’s business, since Uber is a car service that provides transportation to its customers, and drivers such as [the plaintiff] perform that transportation service. Uber holds itself out as a transportation service, and it generates its revenue primarily from customers paying for the very rides that its drivers perform. Without drivers to provide rides for Uber’s customers, Uber would not exist.”
Finally, the case contends that Uber drivers fail Dynamex’s third prong, in that they “wear the ‘hat’ of Uber,” but are not engaged in their own transport business when driving for the company.
According to the lawsuit, although Uber attempted to obtain a “carve out” exempting the “gig-economy” company from the regulations of Assembly Bill 5, the California legislature specifically included Uber drivers in the statute. As a result, the complaint states, Uber issued a public statement announcing it would not comply with AB5 regulations and would continue to classify drivers as independent contractors.
The suit requests injunctive relief requiring Uber to comply with state regulations and reclassify its drivers as employees, as well as compensatory damages for all unpaid wages and business expenses.