The trial that will determine whether ride-hailing drivers are employees or independent contractors is nearing. But Uber seeks to restrict the case to just three drivers, rather than a class of 160,000.
Uber is pulling out all the stops to rein in a major lawsuit that could change its business model.
The ride-hailing company is being sued by three former drivers who claim they should've been classified as employees rather than independent contractors. The drivers' lawyer, Shannon Liss-Riordan, has been seeking class action status for this suit on behalf of 160,000 drivers. But Uber filed a 52-page motion on Thursday seeking to limit the case to just the three drivers. The company said these drivers don't adequately represent most Uber drivers.
"The reality is that drivers use Uber on their own terms: they control their use of the app," an Uber spokeswoman said in a statement. "It's why there's no typical driver -- the key question in this case. And why no three people can ever represent the interests of so many different drivers."
Uber's current classification of drivers as contractors means the company is not responsible for all sorts of costs, including Social Security, health insurance, paid sick days, gas, car maintenance and much more. If all drivers are eventually deemed employees, Uber will likely have to pay for all of this, as well as manage a workforce of more than 1 million. Uber rival Lyft is facing a similar suit.
Founded in 2009, Uber provides a mobile app that lets passengers hail a ride from their smartphone. The company began operations in San Francisco and is now the world's largest ride-hailing service, operating in more than 250 cities in 57 countries.
Uber is also the second-highest-valued venture-backed company in the world with a valuation of $41.2 billion. Much of this valuation, however, is based on Uber's potential profits made by running its ride-hailing platform. If the company has to pay for its drivers' expenses, possible profits could diminish or costs could be transferred to passengers.
If the lawsuit is limited to just three plaintiffs, rather than being class action, it could save Uber a lot of money. In its motion, Uber argued that it's created several different service agreements and contracts for drivers, therefore it's difficult to lump all drivers into the same class. The company also included statements from 400 drivers that say they'd prefer to be classified as contractors, rather than employees.
"The fact that Uber provided statements from several hundred drivers who expressed support for the company is not surprising (nor is it relevant)," the drivers' lawyer Liss-Riordan said. "More than a thousand drivers have contacted our firm who are very unhappy with how Uber has treated them and they feel taken advantage of."
Uber has argued that another reason why drivers should be classified as contractors is because they have flexible schedules and can drive as much or as little as they want. However, Liss-Riordan said flexible hours doesn't mean drivers should be classified as independent contractors.
"The law is clear that the relevant question is not whether people 'like' the practice at issue but whether it legal or not," she said. "Employees can have flexibility also, and the mere fact that drivers can choose their hours does not make them independent contractors."
Two federal judges in San Francisco ruled in March that this case will go to court, regardless of the class action status. The hearing is scheduled to begin in August.
Last month it was revealed that the California Labor Commission ruled former Uber driver Barbara Ann Berwick was an employee and not a contractor. The commission ordered Uber to pay more than $4,000 in expenses and other costs for the time period she drove for ride-hailing company. Uber is appealing this ruling saying Berwick's flexible schedule proved she was an independent contractor.
Updated at 4:05 p.m. PT with comment from Uber spokeswoman and the drivers' lawyer Shannon Liss-Riordan.