Uber Drivers Split Class-Action Suit Into Two Parts Over Arbitration

November 5, 2016 
By Steven Wishnia

New York, NY – The ten Uber drivers who filed a federal-class action suit in June contending that the company cheated them out of minimum-wage and overtime pay by classifying them as independent contractors have divided their case into two separate suits.

Four of the ten drivers—the ones who did not opt out of a clause in Uber’s contract that sends all disputes to arbitration—filed a new suit on Oct. 24. The other six, who did opt out, will continue with the original suit.

The split was necessary to avoid having the wage-theft charges sidetracked by Uber arguing that the case should go to arbitration, according to the New York Taxi Workers Alliance and the lawyer representing the drivers. It means that the courts handling the original wage-theft suit will be able to “get to the merits of the case” without being delayed, lawyer Jeanne Mirer told LaborPress.

The new suit, she added, means that Uber drivers can also be part of the workers fighting compulsory arbitration in labor contracts, a tactic employers often use to prevent class-action lawsuits against them. “We think it’s a worthy cause,” she said.

“Workers treated as employees cannot be bound by arbitration against filing claims in court over labor law violations like minimum wage and wage theft,” Taxi Workers Alliance executive director Bhairavi Desai said in a statement Oct. 26. “But Uber drivers, who the company refuses to recognize as employees, are first bound to individualized arbitration before they can bring their grievances to court.  An Uber driver asserting that their low earnings are a violation of minimum wage law has their rights trumped by the arbitration clause.”

Both suits allege that Uber’s control over drivers—setting fares, “deactivating” drivers who get less than top ratings from passengers, mandating a dress code for some services, and helping arrange financing for drivers to get new cars from its preferred dealers—is so tight that it’s absurd and illegal for them to be considered independent contractors instead of employees. Uber, it adds, even docks drivers for taking a route other than the one designated by the company’s geographic positioning system, even if an alternative route has less traffic.

The new suit charges that by classifying drivers as independent contractors, Uber avoids paying overtime to drivers who regularly work more than 40 hours a week. It also alleges that Uber illegally deducts sales tax and contributions to the “Black Car Fund” for workers’ compensation from drivers’ pay, and that under federal law, it is illegal for employers to charge workers for “tools of their trade” if the cost cuts their pay to less than minimum wage. In January, the suit alleges, plaintiff Jakir Hossain cleared only $5 for a 45-hour workweek after his $415-a-week car lease, gas, and tolls were deducted. The next week, he worked 47 hours and came out losing $2.37.

In December 2015, after a federal court in California ruled that Uber drivers there could proceed with a lawsuit against the company despite the clause in their work contracts that said all disputes had to be resolved by arbitration, Uber issued a new work agreement. It specifically prohibited any kind of collective or class action against the company, and drivers had to accept it in order to be able to get fares.

The National Labor Relations Board has ruled twice, in 2012 and 2015, that it was illegal for employers to require arbitration. Federal appeals courts have been divided on the issue. In September, the NLRB and the Justice Department filed a petition before the Supreme Court, asking it to decide on whether employment contracts that prohibit lawsuits violate employee rights under the National Labor Relations Act. Two employers who lost such cases have also petitioned the Court for a hearing.

“This case raises more fundamental questions about collective bargaining and the right to organize,” Mirer said. As Uber has more than 50,000 drivers in New York State, she adds, it would be difficult and ineffective for workers to redress grievances by going through 50,000 separate individual arbitration hearings.

Both cases are likely to proceed slowly, Mirer says. Uber has already filed a motion to dismiss the June lawsuit, and she expects that it will also challenge this one. If the courts rule that the four drivers don’t have to go to arbitration first, they could rejoin the original suit, a NYTWA spokesperson told LaborPress.

November 4, 2016

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