Uber’s announcement that it would continue to classify its California drivers as contractors despite new state legislation classifying the workers as employees drew scoffs from labor law experts.
The company contended that the drivers were not employees because they are not part of its “core business,” which is providing a “technology platform.” Legal experts noted that the company has advanced the same argument previously with little success.
“They will lose that battle, as they have in almost every case they’ve tried to make the argument, here and abroad,” said Wilma Liebman, former chairwoman of the National Labor Relations Board during Obama administration and currently an adjunct professor at NYU law school. “Courts have routinely made little of the claim that ‘we are just a technology company not a transportation company.'”
The California bill, known as AB5, would force the company and other so-called gig-economy companies to completely change their business model, which relies on classifying drivers as independent contractors rather than employees. Contractors are effectively independent businesses and not subject to minimum wage rules and overtime pay, among other regulations. The bill passed Sacramento Wednesday and Democratic Gov. Gavin Newsom has said he will sign it.
Uber’s chief legal officer, Tony West, told reporters Wednesday that the legislation “certainly does set a higher bar for companies to demonstrate that independent workers are indeed independent.” He noted that the legislation codifies a 2018 California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court, that created the higher test. West nevertheless argued that “just because the test is hard doesn’t mean that we will not be able to pass it. In fact, several previous rulings have found that drivers work is outside the usual course of Uber’s business which is serving as a technology platform for several different types of digital marketplaces.”
Liebman said there were several California legal cases leading up the Dynamex ruling that rejected Uber’s argument. She also pointed to cases in the U.K. and European Union that came to the same conclusion. In the UK case, the company argued that it was a third party merely connecting drivers with passengers. The legal tribunal wrote that there was a “high degree of fiction” in the Uber contract when it made that assertion.
Joshua Parkhurst, a New York-based labor rights attorney, noted that the California legislation is specifically about codifying who is an employee by adding clear standards for it. Once a person is determined to be an employee in one instance, that can be cited as proof the next time the workers’ employment status becomes an issue. “To the extent that a company like Uber has to treat their workers as employees in one instance, that relationship changes on the ground,” he said. “If they, say, end up withholding taxes or paying unemployment benefits for a worker, that becomes evidence in the next (case) that they are employees.”
On the same day that the California legislature approved AB5, a New Jersey appeals court ruled that a class action lawsuit alleging that the company’s Garden State drivers were wrongly classified as contractors could progress. The court overturned an earlier ruling calling for arbitration in the case.
Angela McRay, a California Uber driver, filed suit against the company Wednesday. She sought an injunction requiring the company to comply with the Dynamex ruling. “This ongoing defiance of the law constitutes a willful violation of California law,” McRay’s complaint said.
