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Uber Accused of Cheating the Public in Driver Suit Over Pay

Joel Rosenblatt

(Bloomberg) -- Uber Technologies Inc. faces a new legal attack on its refusal to treat drivers as employees that depicts the company as mistreating not just them but the public at large.

A lawyer who’s been fighting the ride-hailing giant in court for six years wants a judge to now take into account the extra costs saddled on California taxpayers by Uber’s business model.

Drivers being cheated out of wages and not being reimbursed for expenses causes California to lose out on payroll taxes, attorney Shannon Liss-Riordan said in an interview. Uber also avoids paying premiums for workers compensation, social security, unemployment and disability insurance, and public assistance for drivers who can’t support themselves, she said.

The company has warned that attempts to convert its drivers from independent contractors to employees under California’s recently passed AB 5 law, which goes into effect Jan. 1, will be handled as they always have: by its armies of lawyers in courtroom combat. For good measure, Uber is pouring tens of millions of dollars into a 2020 ballot initiative in an attempt to shield its drivers from the law.

Uber says the driver Liss-Riordan is representing, Thomas Colopy, can’t show its labor model causes him “irreparable harm.” His request for the company to be forced to reclassify drivers “does not serve the public interest, but rather only his own,” Uber said in a court filing.

Read More: Uber Hit With $650 Million Employment Tax Bill in New Jersey

The case was argued Thursday before U.S. District Judge Edward Chen, who handled one of their previous battles that ended in a $20 million settlement without any change to the company’s business model.

Chen said it’d be “highly unusual” to issue an immediate order, or injunction, requiring Uber to reclassify its drivers before first deciding whether to let the lawsuit proceed as a class action. The judge suggested the case might stand a better chance in state court.

“I’ll take a second look at it but I’m quite skeptical,” Chen said. But he told Uber he’s not throwing out the case at this point.

Liss-Riordan, based in Boston, has waged a long-running legal campaign against Uber and the gig economy broadly, arguing its model is built on cheap labor and legal end-runs around decades of hard-won protections for workers.

AB 5 says workers can generally only be considered contractors if they perform duties outside the usual course of a company’s business. Legal experts say the law weakens Uber’s argument that its drivers are independent contractors, and even the company acknowledges the law creates a higher hurdle.

Read More: Uber Sued for Allegedly Undercutting New York Driver Fares

Liss-Riordan said the law gives her new complaint a legislative ”stamp of approval.”

“It emphasizes the fact that the state of California has recognized misclassification is a public harm,” she said. “The whole state of California understands that AB 5 was passed in order to stop Uber and the rest of the gig economy from misclassifying its workers.”

Uber argues that while Colopy’s “purported injury” could be fixed with monetary damages, the company would be required by the so-called public injunction he seeks “to change its entire business model.”

The company also stands by its argument that it’s not a ride-share company and that drivers are peripheral to its central mission.

“Uber is a technology company, and therefore operates no vehicles and provides no tools or equipment.” Drivers and riders use its application, Uber argues, “to create a business connection.”

A Seattle University law professor who follows these fights closely said that under AB 5, state or local officials may be in a better position than Liss-Riordan to pursue a public injunction.

“There is a public policy question facing all of us about what we demand from employers -- whether we agree that any working conditions that an employer can get an employee to agree to are acceptable, or if we demand some minimum standards,” Charlotte Garden said.

The case is Colopy v. Uber Technologies Inc., 19-cv-06462, U.S. District Court, Northern District of California (San Francisco).

(Updates with judge’s remarks in sixth paragraph.)

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Joe Schneider

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