National trial law firms Robins Kaplan LLP and Keller Lenkner LLC announced today that they have filed a class action lawsuit against Uber seeking injunctive relief and damages on behalf of California limousine operators and other transportation companies for Uber’s violations of California’s Unfair Competition Law and Unfair Practices Act. The suit alleges that Uber misclassifies its drivers as independent contractors rather than employees to improperly reduce its costs and create an unlawful competitive advantage over other transportation providers.
California law has clear standards for classifying individuals as independent contractors: Contractors must be free from the direction and control of the hiring entity, they must not perform work that comprises the hirer’s core business, and they must take customary steps to establish and promote their own business. According to the complaint, Uber fails to meet these criteria, and must therefore classify its drivers as employees.
Uber’s alleged misuse of the independent-contractor classification creates enormous disparities in costs. By classifying drivers as contractors, the complaint alleges, Uber avoids paying for benefits and providing protections to which California employees are entitled under state and federal law, including the reimbursement of expenses, minimum wage, overtime, meal and rest breaks, workers’ compensation insurance, unemployment insurance, health insurance, and the employer’s share of Social Security and Medicare taxes. In this way, the complaint alleges, Uber saves more than $9 per hour in expenses and benefits for each driver, resulting in over $250 million in annual savings in its California operations alone.
The lawsuit states that these cost savings provide an unlawful competitive advantage for Uber, as the company classifies its workers as contractors in an effort to price existing transportation providers out of the market.
“Our clients allege that Uber, throughout its history, has improperly transferred the costs of doing business onto the shoulders of its drivers, and has used that price advantage as a weapon to force competitors out of the market,” said Michael Geibelson, managing partner of Robins Kaplan’s Silicon Valley and Los Angeles offices. “At the same time, according to our clients’ complaint, Uber has been hemorrhaging money, and selling rides at a loss in violation of California law. Our clients’ complaint alleges that Uber must provide what it owes under California law – a fair wage for its drivers and an even playing field for its competitors,” said Ashley Keller, founding partner of Keller Lenkner.
The plaintiffs seek injunctive relief and an estimated $1 billion in remedies under California’s Unfair Competition Law and the California Unfair Practices Act. The case, Diva Limousine, Ltd., v. Uber Technologies, Inc.; Rasier, LLC; Rasier-CA, LLC, Uber USA, LLC, and UATC, LLC, was filed in the U.S. District Court for the Northern District of California. The team also includes Robins Kaplan attorneys Aaron Sheanin and Tai Milder, and Keller Lenkner attorneys Warren Postman, Seth Meyer, and Tom Kayes.
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