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Uber hit with new lawsuit on whether its drivers are employees

After Uber said the key provision in a proposed California law won't necessarily apply to it, drivers are fighting back.

Angela Lang/CNET

The lawsuits against Uber over whether its drivers are employees or independent contractors have already begun. On the heels of California legislators passing a landmark bill on Tuesday that could make gig economy companies reclassify their workers as employees, Uber's chief legal officer said the key provision in the law won't necessarily apply to the ride-hailing company. But some drivers disagree.

A lawsuit, which seeks class-action status, was filed against Uber in federal court in California on Wednesday night. The suit, which was earlier reported by The New York Times, was brought by attorney Shannon Liss-Riordan. She has a long history of bringing lawsuits against gig economy companies, including Uber, Lyft and Grubhub, for reportedly misclassifying workers.

"Uber is claiming that the law doesn't apply to it, which doesn't pass the straight face test," Liss-Riordan said in an email. "The state of California has spoken -- both through its Supreme Court and its legislature -- that workers must be paid fair wages and that employers like Uber cannot avoid their responsibilities under the law." 

Uber drivers are currently classified as independent contractors, sometimes referred to as gig workers, which means they don't get benefits including Social Security, health insurance, paid sick days, workers' compensation or overtime. Many drivers say this system has led to exploitation. The bill that passed this week, AB 5, aims to provide such protections by shifting gig worker classification to employee. Once it's signed by California Gov. Gavin Newsom, the law is slated to go into effect on Jan. 1, 2020.

Tony West, Uber's chief legal officer, said during a press call with reporters Wednesday that he doesn't believe Uber will have to reclassify its workers. Under AB 5, if companies don't want to reclassify their contractors as employees, they must pass a three-part test that looks at how much control the company has over its workers. West said Uber will likely pass this test.

"Just because the test is hard doesn't mean that we will not be able to pass it," West said. "We continue to believe drivers are properly classified as independent ... drivers will not be automatically reclassified as employees, even after January of next year."

Liss-Riordan's lawsuit, however, is asking the court to place an injunction against Uber requiring it to classify its drivers as employees. The complaint says Uber should be required to pay its California drivers minimum wage, overtime and expense reimbursements.

"Uber is a multibillion dollar company," Liss-Riordan said. "It can afford to pay its workers properly if it wants to continue its business."

If Uber doesn't reclassify its drivers as employees in California once AB 5 goes into effect, it'll likely face a slew of other legal battles from drivers across the state. West said Wednesday the company is prepared for such suits.

"Uber is no stranger to legal battles," he said. "We operate in a very regulated environment and we recognize that there will be legal challenges on all fronts."

"I think it's almost past is prologue here," he continued. "I think it is an environment that we have gotten quite used to."

Some lawyers say Uber will face an uphill battle with these worker classification lawsuits.  

"In classification disputes, workers are in a far more favorable position when the hiring entity has to prove their classification of someone as a contractor was right, rather than the worker having to prove it was wrong," said California-based employment law attorney Bryan Lazarski. But, he added, "changes workers can actually see may take many more years and many more legal battles to achieve."          

Originally published Sept. 12.
Update, Sept. 12: Adds comment from attorney Shannon Liss-Riordan.
Update, Sept. 13: Adds additional information on AB 5's three-part test.