Uber Fights Lawsuit Over Drivers' Pay and Benefits

Uber drivers prefer the flexibility of being independent contractors, Uber said in a sharply worded response to a lawsuit from drivers seeking reclassification as employees.

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By Carolyn Said

Uber drivers prefer the flexibility of being independent contractors, Uber said in a sharply worded response to a lawsuit from drivers seeking reclassification as employees.

The San Francisco company on Thursday filed a ream of rebuttals, including declarations from 400 drivers, in U.S. District Court. It seeks to squelch class-action certification for the case, O'Connor et al vs. Uber. If the plaintiffs gain the right to represent 160,000 California Uber drivers and ultimately prevail in court, it would drastically alter Uber's business model, forcing it to provide a range of expensive benefits, including workers' compensation coverage, overtime pay, minimum wage and reimbursement for expenses.

But in its filings, Uber said it is the drivers who would be hurt if they became employees, by being forced into fixed hours and barred from working for other ride services.

"A class-wide determination would destroy the very independence and flexibility that countless drivers love about Uber," its opposition motion said, noting that drivers have "widely varying personal interests and circumstances" and thus cannot be lumped together.

The issue of independent contractor versus employee status has exploded in recent months, spurring national debate and a raft of lawsuits against Uber, Lyft, Postmates, Handy, Homejoy and other providers of on-demand services. These tech startups all rely on workers who set their own hours, and say the business model benefits both the companies and the workers. But critics argue that the rise of independent contractors is creating a new class of workers who lack basic social safety nets.

The Uber case, among the earliest to go to court, is being closely watched, in large part because of Uber's massive size and reach. The company is currently seeking $1.5 billion in additional backing, which would value it at $50 billion, towering above other startups. With hundreds of thousands of drivers, it operates in 58 countries and 311 cities.

In March, U.S. District Judge Edward Chen ruled that the case had enough merit to go in front of a jury. U.S. District Judge Vince Chhabria ruled that a similar case brought by Lyft drivers also deserved a jury trial.

Shannon Liss-Riordan, the attorney suing Uber, said it's not relevant whether drivers like being independent contractors, but whether that practice is legal.

Employees can still have flexibility, she said. "The mere fact that drivers can choose their hours does not make them independent contractors," she said.

Liss-Riordan said more than 1,000 drivers unhappy with their treatment by Uber have contacted her firm.

Some on-demand companies, such as Shyp and Instacart, have recently said they would reclassify workers as employees. Asked during a call with reporters whether Uber might consider such a change, Abby Horrigan, Uber managing counsel for employment, reiterated that its drivers value flexibility.

Last year, a federal court ruled that some FedEx delivery drivers should be employees, a decision frequently cited by those seeking similar status for Uber drivers. But Ted Boutrous of Gibson Dunn, Uber's outside counsel, said that case actually bolsters Uber's argument because the circumstances differed "in radical ways."

FedEx required its drivers to work between 9.5 and 11 hours a day, report to terminals before and after each shift, work within specific geographic territories, deliver packages within certain time windows, wear uniforms and drive specific vehicles painted with specific colors, he said.

"Uber drivers have a degree of freedom and autonomy that contrasts sharply with the FedEx case," Boutrous said.

Uber attacked the three drivers named as plaintiffs in the case as far from typical. "These three plaintiffs do not and cannot represent the interests of the thousands of other drivers who value the complete flexibility and autonomy they enjoy as independent contractors," Boutrous said in a statement.

Uber submitted statements from 400 California drivers who all affirmed that they do not want to be employees.

"I would quit before I would accept an offer to be an Uber employee," said Carlos Olivia, a Los Angeles driver, in one such statement. "I value my freedom as an independent contractor too much and I don't want Uber to tell me when or where I have to drive."

An expert witness, UC Berkeley economist Justin McCrary, submitted a 102-page declaration that underscored Uber's contention that there is no such thing as a "typical driver."

"Drivers use the platform in such a large variety of ways, under such a large variety of working relationships, that many current drivers who have used the Uber app for ride referrals would be harmed if....turned into an employee," McCrary wrote.

Uber also referenced a survey it commissioned earlier this year, in which 87 percent of drivers said they "love being their own boss."

Chen is scheduled to hear the case on Aug. 6 in San Francisco.

(c)2015 the San Francisco Chronicle

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Caroline Cournoyer is GOVERNING's senior web editor.
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