Limo firm to Uber: You misclassify your drivers as contractors, which is unfair

A Southern California limousine company sued Uber in federal court earlier this week, alleging violations of state unfair-competition laws.

While a company suing Uber is not new, the proposed class-action lawsuit appears to rely on a recently decided California Supreme Court decision that makes it more difficult for companies to unilaterally declare their workers as contractors, which effectively deprives them of benefits that they would otherwise receive as employees.

In that case, known as , the court came up with a three-part test to figure out whether companies can assert contractor status or not. The new case is called .

Some legal experts say that the earlier decision in may bolster an argument in this new case around unfair competition that has previously been difficult to win on in federal court. In short, Diva Limousine just might succeed where other federal lawsuits have failed.

“This test simplifies a court’s analysis for an employment relationship and gives predominant weight to the control-of-work factors,” Michael H. LeRoy, a law professor at the University of Illinois at Urbana-Champaign, emailed Ars.

However, others were not so sure.

“I’d like to say this case is different, but I don’t think that it is,” Veena Dubal, a law professor at the University of California, Hastings, emailed Ars. “It seems to raise the same arguments re: unfair competition that have been raised by many cases before it. Misclassification is a sub-issue in this case. If another court finds conclusively that Uber drivers are misclassified for wage purposes, then it will become relevant.”

Easy as ABC

In , the California Supreme Court found that companies can only say that their workers are contractors rather than employees under these conditions:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, (B) that the worker performs work that is outside the usual course of the hiring entity’s business, and (C) that the worker is customarily engaged in an independently established trade, occupation, or business, the worker should be considered an employee and the hiring business an employer under the suffer or permit to work standard in wage orders.

For years, Uber has fought tooth and nail against having its drivers be classified as employees and not only in the United States—Uber lost a similar case in 2016 in the United Kingdom, and a major case on this exact issue is currently pending before the 9th US Circuit Court of Appeals in San Francisco.

In July 2018, a New York labor board ruled that dismissed Uber drivers were considered “employees” for the purposes of collecting unemployment benefits.

Lawyers for Diva Limousine argue that Uber’s potential competitors have a dramatic lead on traditional rivals as Uber uses “illegal cost savings” as a way to undercut competitors.

The crux of the issue, plaintiffs say, is that Uber “misclassifies its primary workforce” and “steals wages from drivers earning below a minimum wage and gains millions of dollars in unlawful cost savings.”

For now, Uber has not responded to the case in court—no hearings have been scheduled.

“We are declining comment given it’s pending litigation,” Matthew Wing, an Uber spokesman, emailed Ars.

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