Lawsuit Claims Uber Saved Upwards of $500M by Misclassifying Drivers as Contractors

A California class action seeks justice after Uber allegedly ignored a ruling made earlier this year.

byRob Stumpf|
Lawsuit Claims Uber Saved Upwards of $500M by Misclassifying Drivers as Contractors

Ridesharing firm Uber finds itself on the business end of another lawsuit this week, as it's accused of avoiding business expenses amounting to more than $500 million annually by incorrectly classifying its employees as California law mandates.

According to Bloomberg, the class action lawsuit was brought to California federal courts on behalf of a local limousine company, Diva’s Limousine, stating that Uber had unfairly stolen business from traditional taxi companies through deceitful tactics that skirted the law. The complaint alleges that Uber low-balled the wages of taxi drivers to increase their profit margin by misclassifying its drivers as independent contractors instead of employees, which they would qualify under per California law.

The plaintiff alleges this workaround goes against a ruling issued in a California Supreme Court case earlier this year, Dynamex Operations West, Inc. v. Superior Court, and that Uber stands to avoid paying somewhere around $9.07 per hour in expenses and benefits to drivers. This includes the average cost to cover such items as minimum wage, mandated breaks, unemployment compensation, social security, and Medicare.

This particular battle has been hard-fought amongst Uber employees across the world. Late last year, a tribunal in London classified drivers as employees, a ruling that directly conflicted the feelings of courts in the United States where the contrary is believed to be true. Uber is also in the process of appealing a lawsuit in Brazil with similar findings. In a Philadelphia courtroom earlier this year, U.S. District Court Judge Michael Baylson ruled that the provisions under the federal Fair Labor Standards Act prevented UberBlack drivers from being classified as employees. This was the first ruling of its kind, according to Baylson, that classified Uber drivers as non-employees under federal law.