Uber Class Action Case Becomes Uber-Risky

What does $100 million buy?  For Uber, an employee by any other name remains an “independent contractor.”  U.S. District Judge Edward Chen for the Northern District of California issued two rulings in late 2015 pointing to disaster for Uber if it persisted in its defense against a “misclassification as independent contractors” charge under California labor law.  In his first ruling, Judge Chen certified the class to allow the class to proceed on the question of whether Uber so controlled driver activities as to be an “employer” of those drivers. In his second ruling, he allowed the class to proceed on the question of employee expenses and tips owed to drivers if the first issue was decided in favor of “employer-employee” status.

But is $100 million enough?  That will be decided by Judge Chen who must review the sufficiency of the settlement to address the real likely losses.  As a benchmark, apple to orange it may be, Fed Ex paid $226 million to compensate misclassified drivers for their vehicle and equipment expenses.

Uber Class Action Settlement Is Not the End.

Will this allow Uber to slumber?  No, the irritating attacks by drivers who are controlled and shorted will continue in other jurisdictions outside California for similar claims.  Also, a settlement does not decide the Uber misclassification issues that arise as new drivers are hired post settlement.  The Uber drivers covered by the settlement will be replaced by waves of new drivers.  Will $100 million become a periodic expense of doing business for Uber?  That is, will settlements be like fines paid for willful continuing violation of the law?  The bottom line is that the legal and moral issues for Uber, in my opinion, are secondary to the economic issue:  will the cost of violating the law be outweighed by the profits derived?