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The Almighty Buck The Courts Transportation

Uber Class-Action Case May Hinge On What the Drivers Want 88

Posted by timothy from the not-to-put-too-fine-a-point-on-it dept.
New submitter shanemccarthy writes with a story at Forbes that lays out a non-intuitive factor in the ongoing class-action suit over alleged labor law violations filed in the name of Uber drivers. Namely: how Uber drivers see themselves in relation to the company. While some drivers consider themselves, or would like to be considered, employees, and accrue the conventional benefits of employee status at a large company (and Uber, for all its crowd-sourcing, disintermediating origin story, is large enough to garner a valuation in the billions), a considerable number of the drivers do not want to give up their status as independent contractors. The rules of class action lawsuits, though, mean that if Uber's drivers are classed as employees, those who would like to remain independent won't have that option -- so the company is lining up examples of drivers who would seem by no one's definition to be employees, and who want to keep it that way. See also this earlier story about workplace classification for these drivers and others in non-traditional work arrangements.
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Uber Class-Action Case May Hinge On What the Drivers Want More

Uber Class-Action Case May Hinge On What the Drivers Want

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  • From the article, "Can they be forced to go along with the litigation anyway? Congress tackled this question with lawsuits under the Fair Labor Standards Act a long time ago and in 1947 required plaintiffs to opt in to collective wage-and-hour suits.The idea was to prevent lawyers from pursuing litigation on behalf of employees who didn’t know about or consent to it." So, Uber, lawyers, and/or emplyees wanting a 3rd type of worker, not 1099 nor W2, has precedent of not being accepted by courts before

    • Re:Precedent (Score:5, Insightful)

      by Spazmania ( 174582 ) on Sunday July 12, 2015 @01:23PM (#50093883) Homepage

      Typically "when is a contractor an employee?" hinges on three primary factors:

      1. Who sets the hours? Company? Employee. Worker? Contractor.

      2. Paid by the task? Contractor. Paid by the hour? Employee.

      3. EIN on the 1099? Contractor. Social Security Number on the 1099? Employee.

      The IRS has a page describing the myriad other factors that are considered, but if answers to the three above all agree with each other, that's generally what you are.

      http://www.irs.gov/Businesses/... [irs.gov]

      • One of the things people seem to forget is the "common sense" argument that labor laws are here to protect employees.
        If you try to make an organizational-construct where by the small people (who needs this protection) is denied status as employee, you are working against the spirit of the law/regulation.
        It's common sense to argue that the regulation was meant to protect your "contractors".

        So all the technical arguments about hours, paid by task/hours etc. might not be important at all.

        Ideally, though

        • Re: (Score:2)

          by jopsen ( 885607 )
          Warning, I'm no lawyer, and not an expert on the US legal system.
          But I imagine that some judges won't allow you to out-smart the law, but who knows... maybe in America...

          • I'm not a lawyer either, but I've paid enough to them over the years...

            I would agree with you, few judges take a positive view on people who try and get clever with the law...

            The law says what the Judge thinks it says, no more or less. Don't like it? You can always object or appeal.

        • Re: (Score:2)

          by tomhath ( 637240 )

          It's common sense to argue that the regulation was meant to protect your "contractors".

          That doesn't make sense at all. The point of being an independent contractor (use your own tools, set your own hours, etc) is that you are a business selling business services to another person or company, with all the independence and control that goes along with self-employment.

          The argument here is whether the drivers are employees, not whether someone who isn't an employee can get the benefits of being one sometimes and being independent at other times

      • 3. EIN on the 1099? Contractor. Social Security Number on the 1099? Employee.

        If you are getting a 1099, then you are a contractor. An employee gets a W-2. If you are getting a 1099 with a SSN on it, it could be that you are "self-employed" which allows you to use your SSN as your EIN. But for a very small price ($25 in my state), you can set up an LLC which will provide you much more protection of personal assets.

  • Actor's agent is also an employer? (Score:3, Interesting)

    by willworkforbeer ( 924558 ) on Sunday July 12, 2015 @11:48AM (#50093369)
    The agent lines up work options, the actor decides to take it or not.

    - Actor pays her own expenses
    - Actor works whenever she chooses (or not)
    - Actor gives a percentage of her earnings to the agent for successful gigs.

    Is the agent her employer?

    • Re: (Score:2)

      by Mitreya ( 579078 )

      Is the agent her employer?

      I think once the agent begins automatically charging extra $$$ for every facilitated job in order to ensure that the actor does not attack the employee while working, such agent might become the employer. (Save Rides Fee) [marketwatch.com]
      Also, doesn't Uber provide insurance to drivers now? This violates the "Actor pays her own expenses" part of the analogy.

      • Nope. Acting agent has an exclusive % contract, the actor agrees to it expressly. A good agent offers lots of benefits and perks, spends lots of dough to keep the Tom Cruises on board, maybe 6 figures per year if necessary in limos, dinners, trips, and goodies. They could let Tom pay all that, but it's good for business as an agent.
      • In Australia, Uber has been quietly paying millions of dollars that drivers have incurred for operating an unlicensed cab.Taxi and limo drivers are r4esponsible for their own fines.

    • Re:Actor's agent is also an employer? (Score:5, Interesting)

      by kamapuaa ( 555446 ) on Sunday July 12, 2015 @12:15PM (#50093535) Homepage

      Drivers don't really have the option not to take rides...they have to accept 90% of rides offered, or they're out of Uber. Uber also doesn't let drivers see the routes they're going to take ahead of time, just where the pickup locations are. Uber also sets prices that the drivers are going to work at.

      So going with your analogy, imagine if the agent told the actor, "in order to remain an actor, you're going to work some unknown jobs at specific locations I give you, and I've decided you're going to do this work for 20% less than you received last time, and your only recourse it to quit." It sounds like a W-2 job to me.

      • So the agent says. "if you turn down a certain % of the potential work I get for you, at some point I am dropping you and working with another actor because I am paid on commission."

        And you can just go get another agent, Lyft for example.
      • Top Hollywood agents will kick you out if you refuse to work, they are paid on commission. Plus, with Agent Uber you can "clock out for vacation" any time, every 30 minutes if you like. And you can always continue with Agent Lyft if you are unhappy with Agent Uber.

        Or quit acting altogether, it is optional.

      • Drivers don't really have the option not to take rides...they have to accept 90% of rides offered, or they're out of Uber.

        Don't be stupid: if they don't want to take rides, they have the option of not signing-on to the system.

    • Uber will drop you. Also you have to have an Uber phone. Calling it a "lease" does change a thing.

      Uber just wants to get out of paying the employer expenses everyone else has to. As a society we've built our entire quality of life around our employers, so I can't see that ending well. Plus without trashing their employees quality of life their business model doesn't really work.

      • Re: (Score:2, Insightful)

        by willworkforbeer ( 924558 )
        Hollywood Agent says: We will represent you but you got to do a few things. Like stay in touch, we're paid on commission, so we need to reach you when we need to reach you. .. take all the vacations you want, but when you are available to work, be reachable this way. And if you don't like our agency, continue with Agent Lyft.

    • This is a silly analogy, actors are unionized and the actor-agent relationship is mediated by the union, just as the actor-employer relationship is. Working through the union is such a big part of acting culture that Ronald Reagan ran it for a while. ... if you are going to make an acting analogy, Uber is more like SAG, than a super-agent. Sure, there are other unions an actor could join, but most actors are going to make the most money working under SAG rules. The difference here is that the actors get

    • Re: (Score:3)

      by gnupun ( 752725 )

      Is the agent her employer?

      In 99.99% of the cases, the public doesn't know the name of an actor's agent. S/he is just a middleman doing some specialized work like contract price negotiation.

      When you book a taxi, you choose the taxi based on Uber's reputation, and not on the driver's reputation. This is completely different in the actor's case where you don't care about the agent's reputation as much as the actor's reputation.

      Uber handles all these roles:
      a) agent of e-taxi drivers
      b) marketing and selling e-ta

  • piecework (Score:1)

    by Anonymous Coward

    for each "independent" driver Uber trots out, i show you a pieceworker who is serially unemployed. Uber requires many things of the worker (vehicle can't be "too old", conduct and dress standards, etc.), collects time and attendance data, maintains umbrella insurance for the worker, and issues paychecks. All work products remain the property of Uber. Uber is an employer, and the drivers are employees.

    • Car analogy... (Score:2, Interesting)

      by tlambert ( 566799 )

      Uber requires many things of the worker (vehicle can't be "too old", conduct and dress standards, etc.), collects time and attendance data, maintains umbrella insurance for the worker, and issues paychecks. All work products remain the property of Uber.

      Car analogy...

      OK, I lied, it's not an analogy. It's specifically about cars.

      This is exactly how the service departments work at automobile dealerships, down to the requirement that the mechanic provide a certain class of tools, codes of conduct towards customers, wear a dealership logo'ed coverall, collects time and attendance data (contractors are paid by hours worked in the contract, so this has to be collected), attendance data (reserving a bay is expensive, and you want contractors who are eager to be

      • This is exactly how the service departments work at automobile dealerships, down to the requirement that the mechanic provide a certain class of tools, codes of conduct towards customers, wear a dealership logo'ed coverall, collects time and attendance data (contractors are paid by hours worked in the contract, so this has to be collected), attendance data (reserving a bay is expensive, and you want contractors who are eager to be present; you also have to collect this information to know how much liabilit

        • Unless I misunderstand this, surely the contract is with the service shop though, which may be a single mechanic, but might just as easily be a small firm with half a dozen mechanics on a regular salary.

          Not quite sure how it works in the US, but there are all sorts of subtle rules in UK legislation that differentiate a "disguised employee" from an independent one-man company. Although the former is still treated differently from an employee with a temporary contract. The nature of Uber would put them into

      • Re: (Score:1)

        by KGIII ( 973947 )

        They are all pretty much hourly employees that I know, I know one who is salaried and I know none who are contractors. Where do you live? I deal with dealership mechanics all the time as cars are a hobby of mine. I own a fair number of cars and insist that they are in top condition so I even have a number of friends in the industry. I have not discussed the workings of their dealership with all of them but I have discussed the details with a fair number of them.

  • % whois llrlaw.com (Score:3)

    by tlambert ( 566799 ) on Sunday July 12, 2015 @12:30PM (#50093589)

    % whois llrlaw.com ...
    Registrant Organization:
    Registrant Street: 100 Cambridge Street, 20th Floor
    Registrant City: Boston
    Registrant State/Province: Massachusetts
    Registrant Postal Code: 02114
    Registrant Country: United States
    Registrant Phone: 6179945800
    Registrant Phone Ext:
    Registrant Fax:
    Registrant Fax Ext:
    Registrant Email: ssimpson@llrlaw.com ...

    % lynx llrlaw.com ...
    Welcome to Lichten & Liss-Riordan, P.C.
    The Labor, Employment & Class Action Specialists
    Lichten & Liss-Riordan, P.C. is a plaintiffs’-side employment and union-side labor law firm, whose attorneys have achieved national recognition for their work representing employees and unions in wage and hour, discrimination, and other employment-related litigation. ...

    So.

    Is it an ambulance chaser that's trying to assemble a class for a class action lawsuit?

    Not sure. But indications from the original link are that they are not stating the primary plaintiffs, they aren't stating a docket number, and they aren't stating the percentage they will be taking of any settlement.

    They also, as madsenj37 has previously pointed out, made claims on forced class membership based on a misinterpretation of the provisions of the Fair Labor Standards Act.

    But it will be fun to sit back and watch them go fishing in deep pockets that don't exist in terms of Uber not yet having IPO'ed, but the timing is a bit coincidental, isn't it?

  • This case hinges on exactly the same thing as all other cases, the judge. If patent litigation has revealed anything, it's that the law is exactly what the judge wants it to be.

  • Congress should make a decision about which laws should apply: I think probably some laws about employees and some laws about independent contractors should apply.

    • Congress should make a decision about which laws should apply: I think probably some laws about employees and some laws about independent contractors should apply.

      The laws are already quite clear on this subject. Misclassifying employees as contractors is nothing new or "innovative". The only reason we're hearing about this is that the Uber founders were arrogant enough to believe that the law didn't apply to them because they were running their gypsy taxi service with new technology. But the law doesn't

  • Consider also the case of a franchise owner of a restaurant like McDonalds or Subway. The corporate franchise parent sets very strict rules on appearance, service, quality, procedures, product purchasing, marketing etc, but the owners pay for the facilities, equipment, product, fees, licenses, etc. Would this ruling potentially reclassify all of them as employees of the franchise parent? It may come down to convenience for the IRS to collect payroll taxes - they'd much rather just deal with Uber and not

    • Consider also the case of a franchise owner of a restaurant like McDonalds or Subway..... Would this ruling potentially reclassify all of them as employees of the franchise parent?

      I suspect not... franschise owners have employees and are not necessarily the "small man", this matters because the spirit of the law/regulation is to protect people who needs it.

  • Why does it have to be one or the other? (Score:3, Interesting)

    by LogicLoop ( 1186965 ) on Sunday July 12, 2015 @01:42PM (#50094005)

    Years ago, I worked for an IT consulting company that gave its workers the option of being full employees (with a standard benefits package including 401K, health insurance, paid time off, etc.) OR contractors who received no benefits, but a significantly higher wage. The client paid the same rate either way, the workers got to choose which arrangement worked best for them, and the consulting company (presumably) got their cut ... a true win-win.

    I'm sure the trade-offs with Uber aren't exactly the same, but I still don't see why they can't offer their workers more than one option.

    • I'm fine with upper middle class professionals trading some financial risk, with the prospect of earning more money by being an independent contractor.

      But I don't like this being used to generate a class of working poor that sits many hours in the car, in order to get some rides, earning (on average) much less pr. hour than the minimum wage.

  • A bunch of people want to give up all the benefits of being an employee, in exchange for nothing? It's not as if Uber will be forced to make everyone work 8:00-5:00 if the lawsuit declares them employees. And it's not as if Uber can't split their workforce into employees and contractors by changing a few things. They just can't pretend their employees are contractors to avoid giving them employee benefits.

  • I'm not so certain that Uber could survive if the drivers were considered employees. If they were then any injuries to them or their passengers would be held against Uber. That would make the scheme an economic failure. Further why would employees be supplying the car? The IRS defines who is or is not an independent contractor and things like providing a desk or certainly a car make you an employee. The drivers would also need a business permit and you can bet the insurance would bring it all to a

    • Re: (Score:2)

      by Shados ( 741919 )

      If Uber's drivers are considered employees, Uber would simply have to get some kind of liability insurance. The cars could still be rented from a 3rd party (isn't that what ZipCar does?).

      The biggest overhead would be needing an HR department and having to manage all that crap...but they could contract out for that part.

      It would definitely increase their cost, because they couldnt screw over their employees as easily as they could contractors, but it would most likely be possible while staying profitable.

  • The rules of class action lawsuits, though, mean that if Uber's drivers are classed as employees, those who would like to remain independent won't have that option...

    I call bullshit on this. There are thousands upon thousands of companies out there whose employees work alongside contractors in the computing industry on the same projects. There is nothing in the law that dictates that if one person is an employee, all workers must be employees. Nor is the reverse true.

    It is up to the company and the f

    • Re: (Score:2)

      by plopez ( 54068 )

      You are wrong. The people they work next to are not contractors. They are employees of contracting houses. There is a big difference. I have worked as a 1099 before and as a 'contractor' for a contracting house. The 'contractor' things was not a 1099 gig, it was an employee/employer relationship.

      • You are wrong. The people they work next to are not contractors. They are employees of contracting houses. There is a big difference. I have worked as a 1099 before and as a 'contractor' for a contracting house. The 'contractor' things was not a 1099 gig, it was an employee/employer relationship.

        I'm confused. You say that there are no contractors, there are only employees of contracting houses. Yet you go on to say that you have been both a contractor (paid on 1099) and you have been a contractor (paid W2 by a contracting house).
        Now you were probably an employee of your own contracting house when you were paid 1099. Either that or you had another employee/employer job. The government gets pissy if somebody somewhere isn't paying into the Social Security Ponzi scheme.

        • Re: (Score:2)

          by plopez ( 54068 )

          As a 1099 I was a real contractor. I paid all my own taxes including SS. I have an EIN on file with the IRS which I use when I freelance and is used for these purposes. I have worked as an independent contractor, a 1099, and as an employee of a contracting house. When I was an employee of the contracting house I was incorrectly referred to as a contractor. I was not, I was an employee but not of the contracting house's client.

          It isn't all that hard to grasp.

  • Does the payer provide the tools and equipment for the worker to use, or does the worker provide his or her own?

    How much ability, authority, or right does the payer have to exercise control (even if they do not they ever exercise it as such) over a worker concerning what work is to be done, and the manner in which it is done?

    Does the payer assume responsibility for any regular operating expenses, or is does this responsibility fall to the worker?

    Uber drivers are independant conractors. Obviously. W

    • Uber drivers are independant conractors. Obviously. Why is there even any question?

      There is a question because unlike independent contractors, they cannot:
      Set their own rates.
      Choose to turn down 99 out of 100 jobs if they so desire.
      Work simultaneously for other organizations.
      Choose the method by which they will perform the delivery. By car, rickshaw, train, or whatever so long as they do it within the negotiated time and for the negotiated price.

      • Re: (Score:2)

        by mark-t ( 151149 )

        1. Not really relevant... a payer can decide they are willing to pay any workers they can get for a particular job some certain set amount.... and if a would-be worker doesn't want to accept that amount, then they aren't obligated to do the work in the first place. That doesn't remotely make them an employee. At worst, it only makes them an unemployed contractor.

        2. Again, not really relevant... if an independant contractor kept refusing job after job that he was being offered by some payer, there's e

  • The US has a long and deep history of low income workers being suckered into fighting against their own good in favor of powerful monied interests.

  • That's a whacked sense of symmetry.

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