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What one national media outlet refers to as Uber’s “freelance labor model” generally works quite well for the company, obviously, given the online transportation entity’s estimated worth of as much as $68 billion.
At its core, that model regards company workers — that is, the hundreds of thousands of Uber drivers — as independent contractors. Such a designation enables Uber to avoid paying those workers for gasoline and expenses, and further contributes to profit by not requiring the company to fork out money on benefits that are customarily paid to persons designated as “employees.”
That distinction — independent contractor versus employee — is the focal point in longstanding litigation between the California-based company and nearly 400,000 past and current drivers. Those workers say that they have been unlawfully shorted on benefits that are owed them by Uber, which they contend has been wrongly classifying them as contractors.
Two class-action lawsuits regarding the matter were seemingly resolved earlier this year when both sides reached agreement in a settlement pact calling for Uber to pay the plaintiff drivers $100 million.
A federal judge in San Francisco recently nixed that agreement, though, stating that it wasn’t a fair or reasonable outcome for the drivers.
The parties will now have to recommence negotiations. The Wall Street Journal article cited above states that they must now meet “to figure out next steps and appear in court on September 15.”
If drivers prevail on the “we are employees” argument, Uber might well be assessed penalties and damages far exceeding what the original settlement called for.
We will keep readers duly apprised of any important details that emerge in the case.