April 28, 2016
By Steven Wishnia and Neal Tepel
New York, NY – With Uber’s claim that its drivers are independent contractors left intact by the settlement of a class-action suit against the company, the unions trying to organize New York’s taxi drivers are pondering what to do next.
Bhairavi Desai of the New York Taxi Workers Alliance reacted angrily, calling the settlement “a travesty.” “It’s really startling that we’d enter into a settlement over wage theft that the company gets to dictate how much they’ll pay back,” she said. “It’s too early for us as a movement to compromise. A compromise at this stage is nothing short of capitulation.”
James Conigliaro of International Association of Machinists District 15, which represents black-car drivers and has been working with NYTWA to organize Uber drivers, said the union was still “formulating our plans.”
In the settlement, announced April 21, Uber agreed to give $84 million to 385,000 drivers in California and Massachusetts. Most of that—an average of about $8,000 each—will go to full-time drivers who opted out of the arbitration clause in their agreement with the company, said Shannon Liss-Riordan, the Boston labor lawyer who represented the drivers. Uber also agreed to let drivers post signs in their cabs that tips are not included in the fare; that it will only “deactivate” drivers, cutting them off from access to the app, for cause instead of at will; and that it will “fund and facilitate” a drivers’ association that will have quarterly discussions with management.
“We got a tremendous settlement,” Liss-Riordan told LaborPress.
The agreement, however, did not declare the drivers employees of Uber. Having them be independent contractors has been the centerpiece of the company’s business model. It claims that they are simply people using the app to share their cars, and “want to be their own boss” with the freedom to choose whether “to drive most of the week or for just a few hours.” While Uber sets fares—and thus determines drivers’ incomes—and can deactivate drivers for violating its rules, it doesn’t have to pay minimum wage, Social Security, unemployment benefits, or workers’ compensation.
“We are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees,” Uber CEO Travis Kalanick said in a statement posted on the company Web site.
There were two compelling reasons to settle the case, Liss-Riordan says. First, the federal Ninth Circuit Court of Appeals earlier this month agreed to hear Uber’s challenge to the drivers’ class status, and Uber said if it lost, it would appeal to the Supreme Court. Even if the high court, which has not been friendly to labor or class-action suits, ruled in the drivers’ favor, she said, the litigation could have prolonged the case for more than 10 years. Second, a jury trial would have taken place in the city of San Francisco, where Uber is popular, and “with a jury, you just don’t know. It’s a roll of the dice.”
“We got a settlement that will get a lot of money back and made some important policy changes at Uber,” she said in an e-mail. “We got what we believe to be an excellent result now, without waiting 10 years, and we faced a real risk of losing everything.”
“The settlement provides significant benefits—both monetary and non-monetary—that will improve the work lives of the drivers and justifies this compromise result,” Joseph DeWolf, president of the 2,500-member California App-based Drivers Association, said in a statement.
Desai disputes that logic. “The loss from not going forward is far greater,” she says. All indications were that the courts would have favored the drivers, she adds; the California Labor Commission ruled last June that a former Uber driver was an employee. And the drivers’ association, she avers, will be powerless without the protections of federal labor law and the right to collective bargaining.
“Without that, what do you have to stand on?” she asks. “It’s difficult enough for a drivers’ association to negotiate with small taxi companies. How are they going to negotiate with a $64 billion company?”
The settlement “doesn’t get Uber off the hook,” says Liss-Riordan. “This is not the end of the story.” Several similar cases are pending in other states, and she expects that Uber drivers will seek rulings from state agencies that they are entitled to unemployment benefits and workers’ compensation. She also hopes that passengers “will rise up against Uber and demand a tips function on the application.” Lyft, a smaller app-based taxi service, has one, she adds.
On the other hand, both Liss-Riordan and Desai agree that California labor laws are among the most favorable to workers of any state in the country. They expressly require employers to reimburse employees for job-related expenses—such as the gas, tolls, insurance, and car maintenance Uber drivers have to pay for to keep working. Companies do not have to reimburse independent contractors.
"That fight continues," says Machinists President Robert A. Martinez. "Those Uber drivers need a voice. We’ll move forward and see what we have to do to give them one."