A federal appeals court has handed a defeat to Uber drivers who were suing the company in three separate lawsuits over claims that they were misclassified as independent contractors instead of full-time employees.
The litigants must go through arbitration to pursue their claims against the company rather than have the claims heard in open court.
The decision also means that the drivers in one of the suits can’t file a class-action against Uber. Had the case been able to go to trial, drivers could have pursued larger damage claims against the company.
In a 3-0 decision, judges on the 9th U.S. Circuit Court of Appeals in San Francisco flipped the ruling of a lower court judge that would have allowed Uber drivers to sue in open court.
As full-time employees, the drivers argued they would be entitled to reimbursement for gas and expenses around maintenance and general upkeep.
According to Reuters, the drivers also claimed that Uber was not allowing them to keep all of their tips from passengers.
While Uber drivers aren’t able to avoid forced arbitration for complaints against their non-employer the platform, Uber did do the right thing recently in ending forced arbitration in cases of sexual harassment or assault.
Were the Uber drivers to proceed with their lawsuit and become full-time employees of the ride-hailing company, they’d be likely to face the same forced arbitration claims. Full-time Uber employees are also forced into arbitration to settle disputes rather than have their claims heard in open court.
At the heart of the dispute for Uber drivers is the demand for the safety net that comes with full-time employment and for companies a potentially significant hit to their bottom line.
Ride-hailing platforms like Uber and Lyft have long argued that the drivers on the platform aren’t actually employees of the company, despite being the providers of the service that the technology platforms facilitate. For drivers, the inability to set pricing or negotiate the percentage that Lyft or Uber will take of the fees that are charged means they operate more like employees than bidders in a marketplace.
And earlier this year, the California Supreme Court seemed to agree with the drivers’ argument.
In April, the California Supreme Court issued a ruling in a case involving the nationwide delivery company Dynamex Operations West Inc. and its contract drivers. The decision established a new test for enforcement of California wage laws, and made it much harder for companies in California to claim that independent contractors are not actually full-time employees.
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