Uber finds loophole in the system regarding paying workers; leads to lawsuit.

The lawsuit
known as O’Connor vs Uber was started back in 2013 regarding drivers wanting to be classified
as employees instead of as independent contractors for Uber. Due to a new court issued
landmark ruling in California, that was already present in Massachusetts, these people were
able to sue Uber so that they would have to prove that drivers do not perform services within
Uber’s usual course of business. These people wanted to be classified as employees instead of
independent contractors so that they could receive the benefits that came along with being an
employee under their state’s law.

Uber is a company and an app that provides a private driver service for customers that is
convenient and inexpensive. People use the app to locate drivers in the app that are near their
location that provide a taxi-type service to get them to a destination. The drivers are paid by
miles driven and are able to get tips through the app from the customers. Drivers are able to
choose their own hours and be their own boss. Drivers provide their services through the app
using their own vehicles. Unlike a traditional taxi service with company cars, Uber allows their
drivers to ride around in their own vehicles and at their own comfort. As long as you have valid
car insurance, a driver’s license for at least a year, and no major criminal history you can apply
to become a driver. Uber as a company also provides other services like their Uber Eats which
delivers food to customer’s houses with what they ordered on the app. Although they provide
these other services, the lawsuit is about the driving services that they provide with the Uber
app.
The lawsuit between O’Connor and Uber started back in 2013. The plaintiffs in this case
were Douglas O’Connor and Thomas Colopy. The defendants were Uber. This lawsuit was
brought about because of the new landmark ruling that was issued in California Supreme Court.
The drivers in California under the Uber app wanted to be recognized as employees instead of
independent contractors. They wanted to be recognized as employees because Uber would be
required to pay them minimum wage, as well as give them benefits that come with being
employed at a company. The suit claimed Uber classified its drivers as contractors to avoid
paying them a minimum wage and providing benefits. If Uber wasn’t able to prove that it was not
a transportation company, then it would the drivers would be considered employees under
California law. The United States Court of Appeals for the Ninth Circuit ended up ruling that
Uber could put drivers into private arbitration rather than resolve their claims in a public lawsuit.
The case ended up taking 6 years to settle when it finally settled in 2019.

Uber lost this lawsuit and ended up having to pay $20m out. In order for drivers to claim
apart of this money, they have had to driven for Uber between August 16, 2009 and February
28, 2019 in California or Massachusetts to be eligible for the payout. Along with losing the suit,
Uber ended up changing the way it removes drivers from the service to make it more
transparent. Due to this law being put in place in these 2 states, Uber was going to lose the
case because it could not prove what it had to prove, but for a billion dollar company, $20m is
not much. Due to the ruling that they could settle for private arbitration, they save a lot more
money then if they went to a public lawsuit that went to trial. Both parties received win-lose
situation in the lawsuit. Uber despite losing the lawsuit, was able stay from going to a public
lawsuit. The drivers received money in arbitration instead of being classified as employees
under the California law. Although this case might be over, the plaintiff’s lawyer says that this
will not be the end. She states that it was only for a small number of drivers and looks to future
for more cases against companies also classifying their workers under independent contractors.

Uber ending up having to pay out $20m to these people is a win for the plaintiff side, but
as their lawyer said it was only a small victory. Uber still classifies its workers as independent
contractors and will probably continue to do so in the far future. The case was very important
because it set up for how companies like Uber and that operate like them, will operate in the
future. It sends out a warning for other apps like Postmates, Grubhub, Lyft, etc. that operate in
similar ways to Uber. As laws change around states and countries, these apps have to continue
changing their methods to keep up with them. Business techniques change as a result of
lawsuits and continue to change with the times.