Gig News: Brazilian Judge Finds Uber Driver Is Employee

A labor court judge in the state of Minas Gerais, Brazil has found that an Uber driver there is an employee of the company, taking the debate over the classification of drivers to another country.  The Brazilian newspaper Zero Hora reports that the decision is the first in Brazil to recognize Uber as an employer of drivers.  According to Reuters, the judge “ordered Uber to pay one driver around 30,000 reais ($10,000) in compensation for overtime, night shifts, holidays and expenses such as gasoline, water and candy for passengers.”  Uber announced that it will appeal the decision.  The ruling only applies to a single driver, but could open the door to more challenges.

Brazilian news portal G1 notes that the judge applied a multi-factor test for employment status under Brazilian law.  Key factors included that a) users are assigned a driver by Uber, unable to select from options; b) Uber (not the passenger) pays drivers at the end of each week after withdrawing a percentage, thus going beyond simple mediation of passenger-driver business; c) transport is Uber’s primary business, as partially evidenced by its investment in automobiles vehicles; and d) Uber drivers are submissive to the company, forced to comply with strict rules in order to drive for the company.

Zero Hora also emphasized that the judge found that drivers were encouraged to drive regularly despite flexibility, and that Uber engaged in a hiring process by approving drivers.

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Gig News: NLRB Sides With Uber Drivers in Challenge of Class Action Waivers

In a significant court filing with the Ninth Circuit Court of Appeals, the National Labor Relations Board has backed Uber drivers challenging the validity of driver arbitration clauses with class action waivers, and signaled that the legality of such clauses is an issue of “national significance.”  The Ninth Circuit is currently considering in, O’Connor v. Uberthe enforceability of contract clauses requiring Uber drivers to arbitrate all disputes with Uber and waiving the right of drivers to participate in class actions.  Similar clauses are widespread in the gig economy, and represent a significant barrier for gig economy workers seeking to challenge their classification as independent contractors and not employees.

According to Bloomberg, the NLRB “urged the court in a filing to find Uber’s contract provisions illegally block drivers from joining class-action lawsuits.”  The NLRB further elaborated that the issue before the Ninth Circuit is one of “national significance” because it implicates many cases before courts nationally.

O’Connor represents the most notable lawsuit alleging the misclassification of Uber drivers.  In September, Judge Edward M. Chen of the Northern District of California rejected a proposed settlement.  The Ninth Circuit is considering whether drivers who did not opt-out of the arbitration and class action clauses of their contracts can participate in the class action, as Judge Chen found the clauses invalid.  Notably, in September a Ninth Circuit panel held in a different case that Uber’s driver arbitration clauses and class action  are in fact enforceable.  A petition has been filed for en banc review of that decision.

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Gig News: Federal Judge Rejects Uber Settlement

Last month, Judge Edward M. Chen of the Northern District of California rejected a proposed settlement in the O’Connor v. Uber litigation, a suit challenging Uber’s classification of drivers as independent contractors.  The rejection comes after another judge rejected a proposed settlement in Cotter v. Lyft, a similar suit before the same court brought by the same plaintiff’s attorneys, earlier this year.

Following the Lyft precedent, Judge Chen reviewed the proposed O’Connor settlement and applied “with full force” the factors used by the Ninth Circuit in reviewing such settlements. First, Judge Chen considered the risks to both the plaintiffs and Uber in continuing the litigation.  He acknowledged the risk to the plaintiffs that the Ninth Circuit would overrule his previous invalidation of Uber’s mandatory arbitration agreements, thus compelling individual driver arbitrations.  Judge Chen also opined (contrary to Professor Sachs’ conclusion here and here) that the factors used to determine the proper classification of workers under California law do not conclusively support a finding of either employee or independent contractor status for Uber drivers.  He further recognized that Uber challenged recovery and reimbursements even in the event drivers are found to be employees, and that drivers might not prevail on claims with respect to a) unavailability of meal and risk breaks, b) minimum wage and overtime, and c) workers’ compensation.

Judge Chen also reviewed the substantial risk to Uber of a finding that drivers are employees under California law, estimating a penalty against Uber in excess of $1 billion.  He noted that, even if Uber is successful in enforcing its mandatory arbitration agreements, a court could still decide the proper classification of drivers in considering non-waivable California Private Attorneys General Act (PAGA) claims.  Judge Chen additionally considered that absent a settlement one or more drivers not bound by arbitration (such as those who opted out) could litigate their proper classification and thus affect arbitration results, and that the costs of many individual arbitrations would be significant for Uber.

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Guest Post: The Status of Uber Drivers – Part 3: Applying the Tests

Guy Davidov is the Elias Lieberman Professor of Labour Law at the Hebrew University of Jerusalem, and currently a visiting scholar at Berkeley Law.

This is the final post in a three-part series.

In the previous post I argued that subordination and dependency should be the key to attaching employee status.  These tests are not unlike the ones already in existence in the U.S.  and elsewhere, albeit with some important changes and additions, as briefly explained there.  I have also argued that dependency alone should be sufficient to trigger the application of some (in fact many) work-related protections.

To what extent is there subordination (or “control”, in a very broad sense) in the typical relationship between Uber and its drivers? Benjamin Sachs has argued in several posts here that such control is present.  Indeed, the drivers have to abide by detailed rules of the firm regarding the way they provide the service; and they are monitored at least to some degree through the app.  Moreover, the fact that drivers provide the Uber service to Uber customers on behalf of Uber suggests that they are integrated in the organization, explaining why a relatively high degree of control is necessary (poor service would harm Uber’s reputation and its business vis-à-vis its customers; they are not the driver’s customers).

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Guest Post: The Status of Uber Drivers – Part 1: Some Preliminary Questions

Guy Davidov is the Elias Lieberman Professor of Labour Law at the Hebrew University of Jerusalem, and currently a visiting scholar at Berkeley Law.

This post is the first in a three-part series.

The status of Uber drivers – and others who work for on-demand platforms – has been the subject of a heated debate (and of course an elaborate and highly useful discussion in this blog).  Are they independent contractors, as argued by the firms operating the platforms, or employees?  The recent settlement in one of the suits, in which the plaintiffs agreed to remain independent contractors in return for other concessions, does not settle this crucial issue.  Other suits claiming misclassification remain active.  And crucially, the normative questions are still being debated. In the current post and two following ones I focus on the normative question of what the law should be in this regard (rather than the current state of the law).  Before directly addressing the question of how such workers should be classified, it would be useful to raise a few preliminary questions.

First, does it make sense to retain the employee/independent contractor distinction?

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Gig News: Liss-Riordan Statement on Revised Lyft Settlement

As Reuters reports, Lyft has agreed to a revised $27 million settlement in the California class-action lawsuit Cotter v. Lyft after a previous proposed $12.25 million settlement was rejected by Judge Vince Chhabria.  Shannon Liss-Riordan and Matthew D. Carlson, the attorneys who brought the case on behalf of drivers, have provided OnLabor with the following statement regarding the revised settlement:

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Gig News: As Debate Over Uber Settlement Continues, Three Federal Judges Dismiss Similar Suits

While debate continues over the proposed settlement in O’Connor v. Uber, three other federal cases (summarized below) were recently dismissed by federal district judges who enforced Uber’s mandatory arbitration clauses.  According to the judges in these cases, because Uber’s arbitration clauses delegate questions of arbitrability to an arbitrator and contain satisfactory opt-out and class action waiver provisions, and because it is difficult to prove that individual arbitrations are cost-prohibitive, Uber’s arbitration clause withstood this judicial scrutiny.

Importantly, none of these cases concern California law or California’s Private Attorney General Act, the bases on which Judge Chen found the arbitration clauses unenforceable in O’Connor.  Their significance to the particular settlement in O’Connor is thus unclear.  These cases do speak, however, to the difficulty of overcoming arbitration clauses generally and to the Uber clauses’ viability under the laws of other states.  They are thus in line with concerns that plaintiffs’ attorney Shannon Liss-Riordan’s stressed in discussing her settlement of the O’Connor litigation.

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