Silicon Valley behemoth Uber is no stranger to court battles. Still, this week saw the tech giant face one of its biggest courtroom confrontations yet: Trying to convince a judge to block a lawsuit from proceeding to class-action status.
On Thursday, the company with a whopping $51 billion valuation, went before US District Judge Edward Chen for a hearing in which the judge pondered whether he would grant class-action status to the suit, which seeks mileage and tip reimbursement for 160,000 Uber drivers in California.
The hearing comes as on-demand companies like Uber, Lyft and Postmates surge in popularity and reach, creating a vast pool of cheap, flexible labor. According to the nonprofit Freelancers Union, 53 million Americans now work as freelance contractors. That’s about one in three US workers. And the American Action Forum says independent contractors account for nearly 29 percent of all jobs added between 2010 and 2014. And the so-called 1099 economy already appears to be emerging as a key issue in the upcoming 2016 presidential campaign.
But even as on-demand companies move into the mainstream, critics are calling for broader protections of workers, who as independent contractors do not receive benefits like Social Security, Medicare, and workers’ compensation and cannot unionize. A slew of complaints about the loss of such benefits has rocked the industry and could threaten the entire business model of the on-demand economy.
In June, the California Labor Commission ruled that a San Francisco-based Uber driver should be considered an employee and should receive compensation for mileage and other expenses. (The decision, which Uber is appealing, does not carry the force of court precedent.) In what could be considered pre-emptive moves, some companies, including Instacart, Luxe, and Shyp have announced plans to convert some or all employees to part- or full-time status. Just this week, food-delivery startup Sprig joined them, and company CEO Gagan Biyani said the lawsuits facing other on-demand companies were a factor in the decision.
Of these suits, the one facing Uber is the furthest along. It could be weeks before Chen issues a decision on whether to elevate the suit to class action status. Should he do so, the suit could involve the largest number of plaintiffs against an on-demand company so far.