Uber Class-Action Finding Has Lessons for Communications Firms, Kelley Drye Says

A court decision certifying class-action rights of Uber drivers has implications for other companies that rely on independent contractors, including upstarts and communications companies, Kelley Drye attorney Steve Augustino said in a Friday blog post. “Many communications companies make similar uses of independent contractors to perform key functions, and therefore should heed the lessons of the decision. At a minimum, the Uber decision demonstrates why companies must remain cognizant of how they classify workers in order to avoid similar costly and time-consuming class action cases.” U.S. District Court Judge Edward Chen in San Francisco ruled Sept. 1 that current and former Uber drivers constituted a class that could pursue a claim that Uber violated California’s Unfair Competition law (Douglas O’Connor, et al., v. Uber Technologies, No. C-13-3826 EMC). Four plaintiffs sued Uber on behalf of themselves and a putative class of about 160,000 past and present Uber drivers. They contended they and other drivers were employees, not independent contractors, under state law and thus eligible for various labor protections. Uber argued it had properly classified every single driver as an independent contractor, but Chen disagreed after finding the company's statements created tension with that argument. He noted other federal rulings, including Norris-Wilson v. Delta T Group in the Southern District of California in 2009, which said an employer citing independent contractor classification as universally appropriate “runs at cross purposes with the reason for objecting to class certification.” A Kelley Drye advisory said the case has lessons for companies, including tech startups, using independent contractors to lower costs. “One possible way for a company to avoid a potential class action of the kind filed against Uber is by utilizing contractual clauses that limit the resolution of disputes with independent contractors to arbitration proceedings that exclude class actions,” it said.