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Lawsuit by Uber Drivers Granted Class-Action Status

Motor Trend logo Motor Trend 9/2/2015 Kelly Pleskot

A federal judge granted class-action status to a lawsuit brought forward by three Uber drivers, who claim they should be treated as employees rather than independent contractors.

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Uber risks losing much more money than it would have if the suit only involved the three original plaintiffs. The ridesharing company may be forced to pay back wages, benefits, sick pay, and gratuities to former drivers in the tune of millions of dollars, according to media reports. Plantiff lawyer Shannon Liss-Riordan said the class-action suit could involve "many thousands" of drivers, reports the Los Angeles Times.

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Not every Uber driver is eligible to participate. Uber updated its contract last year, adding an arbitration clause that prevents drivers from entering a class action suit against the company. Only California drivers who didn't sign away that right will be able to proceed with the suit.

If the courts eventually rule in favor of the plaintiffs, Uber would presumably have to change the entire way it operates. Such a ruling could diminish the company's profits, undercutting its newly-minted $50-billion valuation.

A trial date has not yet been set, but Uber plans to appeal the court's decision. The move follows an earlier California ruling that deemed one Uber driver an employee, not a contractor. And a few months ago, a memo released by the U.S. Department of Labor also spelled trouble for Uber, saying that only workers who are in business for themselves should be designated as independent contractors.

Source: Los Angeles Times

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