The fate of Uber drivers in California is being decided right now

It’s left to Judge Edward Chen to decide whether California Uber drivers will be covered by a federal class-action lawsuit that threatens to reclassify the entire state’s drivers workforce as employees of the company.

At stake is whether only three drivers, a portion of California drivers, or all drivers who have used the app in the last five years will face reclassification as employees of the company should the lawsuit prevail.

Currently, Uber drivers are so-called “1099” independent contractors, called that because of the 1099 IRS form they fill out. Because they’re not employees of the company, they do not receive certain benefits, like overtime pay or reimbursement for expenses like gas or mileage.

A wholesale change from contractors to employees could cost Uber tens of millions of dollars — or more.

Uber pushed back against granting class status, arguing that its workforce of independent contractors was too diverse to be adjudicated as one, during today’s hearing in San Francisco’s U.S. District Court for the Northern District of California.

In court today, Judge Chen heard arguments from both sides about whether the three former Uber drivers, the plaintiffs in the case, are representative of a class of Uber drivers as a whole. Should the court grant the class status, it would cover all UberBlack, UberX and UberSUV drivers in California that used the application after August 16, 2009.

He might deliver a ruling this afternoon, or might wait. We’ll be updating this report as soon as we know, so refresh often or click here for the latest.

‘This isn’t a popularity contest’

In a press conference before the hearing, Ted Boutrous, a lawyer from Gibson Dunn representing Uber, decried the notion that this lawsuit should cover all 160,000 drivers in California.

“No three drivers can represent the hundreds of thousands of drivers in California,” Boutrous said.

Should the court rule that drivers are employees, it would “radically change” how people use the app and have “devastating consequences,” Boutrous said.

In a previous filing, Uber argued that the class-action part of the suit should be dropped because the 160,000 drivers “have little or nothing in common, other than their use of the Uber App in California at some point over the past six years.”

Uber had submitted 400 driver statements about being an independent contractor, but Judge Chen disputed their significance in court compared to the 160,000 drivers. “It’s 0.25 per cent,” Chen said. “How is that probative?”

Boutrous, though, continued to argue that there is no mass support for changing from independent contractor to employee. “There is no declarations from people that support what the plaintiffs are saying,” Boutrous said in court. “There’s nothing like that.”

Plaintiff’s attorney, Shannon Liss-Riordan, didn’t want to “play that game” of turning in larger stacks of papers or declarations.

“This isn’t a popularity contest. This isn’t a question of what people want,” Liss-Riordan said.


Uber’s second argument is that its California drivers cannot be considered a class because it had used 17 different agreements to onboard workers. These driver agreements change in many “legally significant ways” including whether they can drive for competitors, can be terminated without cause, and whether they must resolve disputes through arbitration, according it its petition filing.

Judge Chen questioned where there are differences in the contracts for Uber’s right to control. “The language may be different but the outcome is the same,” Chen said. In his view, Uber had the right to terminate without cause.

Liss-Riordan told the court that VP and Global Operations Manager, Ryan Graves, said there was no practice in place for Uber management to check which version of the contract the drivers had signed before they get activated. She also said that driver managers have discretion to decide who gets deactivated and who gets a second chance.

Boutrous, though, claimed that you can’t be viewing Uber’s contracts as employment contracts to begin with.

“This isn’t a contract of employment. This is a software licensing agreement,” Boutrous said.

Uber also claimed a plaintiff has admitted to defrauding Uber out of $US25,000 and so he doesn’t reflect the “class” of drivers. In a deposition, one of the plaintiffs admitted to referring drivers to the app temporarily, paid drivers to complete “sham rides”, and collected more than $US25,000 in referral payments during his time as an Uber driver, the motion said.

Moving forward, Judge Chen has three different options. The first is to grant a class-action lawsuit, meaning all of the drivers in California are covered by the ruling as part of the class. A second, and more limiting, option would be to determine a subclass of drivers.

The last option is to deny class altogether, which means the case would continue as the three individual plaintiffs against Uber, but would not represent the 160,000 drivers in California.

Liss-Riordan also argued that Chen could later decertify the class after they get through trial, even suggesting that the jury could be the one to influence it.

The decision on whether or not Uber drivers — whether three or all of them — is still far out, according to Boutrous. Either side has a right to appeal Chen’s decision whenever it issued. Chen could decide at the end of today’s hearings, or in the coming weeks or months.


NOW WATCH: Having blown it on Uber, investor Gary Vaynerchuk shares his lessons on how to spot the next “unicorn”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.