Uber’s business model is on the rocks late Tuesday after a federal judge granted class-action status to a lawsuit targeting the company’s treatment of drivers as independent contractors.160,000 drivers for Uber are now party to a suit to grant them full labor protection. Any person who drove for Uber in California since mid-August 2009 and is not subject to a binding arbitration clause in her contract with the company will be considered part of the case.
However, as huge as this is, this does not guarantee victory. The judge, for example, did not give the drivers all they wanted. For example, they wanted reimbursement for things like tolls and the like, and that was rejected.
There is hope for the Uber drivers, as multiple courts have ruled in favor of FedEx drivers in similar cases.
Why were they so eager to avoid class action status? Previously, they handled these things individually. In the case of Barbara Ann Berwick, for example, they only paid $4000. Paying the whole class however, while not reaching the $50 billion Uber is currently worth, the sum would be vast--certainly approaching the "billions" wording.
And perhaps more importantly, having a giant chunk of its driver base collectively re-classified as employees would chip away at the company’s reputation for disrupting the taxicab business. Uber would start to look like any other company that hires workers to drive fares around for tips and wages under the normal protections of employment law.
