The driver who beat Uber is just the beginning - get ready for a flood of copycat cases
Barbara Ann Berwick delivered a potentially huge blow to Uber - and the on-demand economy as a whole - when the former Uber driver was declared an employee, not an independent contractor, by the California Labor Commission in June.
As high-profile as Berwick's case became, she's not alone.
There are at least three other open cases that ride-hailing companies are actively fighting in California, according to records obtained by Business Insider:
- Lyft is facing its first and only case. A former Lyft driver filed in February 2014 to reclaim wages for 46 hours of overtime for a two month period and expenses totalling $1,599.68. The hearing was scheduled for today, but has been continued until September, according to Lyft.
- Uber has a conference for a Los Angeles-based case today, according to Department of Industrial Relations records. The ex-driver is claiming more than $6,000 in reimbursable expenses, commission and unauthorized deductions from their wages.
- Another Uber case just had a conference in June. Filed in May 2015, this case is awaiting a date for a hearing, according to Department of Industrial Relations records. The wage claims involved include a month's pay of $184.80 and a bonus of $1,896.
Uber has often settled these cases rather than litigating. An April 2015 case resulted in an $800 settlement, another case was settled outside of the Labor Commission. Three other claims against Uber were canceled or no-shows.
These are not guaranteed wins
The claims revolve around the employment status of so-called 1099 contractors, called that because of the 1099 IRS form they fill out, who are the primary workforce for a lot of on-demand companies, including ride-hailing services Uber and Lyft.
Because they're not employees of the company, they do not receive certain benefits like overtime pay or reimbursement for expenses.
Some drivers are beginning to fight this classification and have filed complaints with the California Labor Commission to reclaim wages, including overtime pay and mileage expenses.
Berwick was the first case Uber faced in the Labor Commission where the plaintiff won and was declared an employee. In turn, Uber had to pay more than $4,000 to Berwick. The company is now appealing the labor commission's decision, and Berwick will be facing a court date in October.
Just because there are more cases in the pipeline doesn't mean it's the death of the on-demand economy. It's more like a game of Russian Roulette - and one that features a moving target.
"You may have a case where someone puts together terrible records. Same thing with Uber. It's a really complicated field of law," said Cliff Palefsky, an employment lawyer at McGuinn, Hillsman & Palefsky.
Berwick won, she says, because she's a "seasoned litigator" - a search for her name returns 26 cases in San Francisco courts alone - and because she came in prepared for her case.
Labor Commission rulings don't set precedent for future cases, but Berwick's win does mean that a playbook to winning a case is out there, said Rich Reibstein, a partner at Pepper Hamilton and co-chair of its independent contractor compliance group.
"There can be a lot of individual cases. It's true that none of them that likely have legally precedential value for the next case because each case turns on it own facts," Reibstein said. "However, once the facts are known in the particular case, the next claimant is likely to piggy back on that same evidence."
There will be more
It's not just ride-hailing companies facing these claims - Instacart and Sprig have also had cases filed against them, according to a request with the California Department of Industrial Relations. The Sprig case was closed, as was one case involving Instacart. A second Instacart case reached a settlement in April 2015 for $898.43.
Employment lawyer Palefsky isn't surprised by the number of cases and cautions that these are likely to continue as well until there is one ruling, or a legislative change, that makes it clearer.
"It just shows that until there is some resolution by a higher authority you can be litigated endlessly. Its going to be a case by case at the lower level and it's going to be a moving target," Palefsky said.
But the more cases are filed and become public, the more new cases could emerge - especially as plaintiffs follow the (potential) money.
"All on-demand companies in the sharing economy have probably shuddered when reading about these Uber lawsuits and commissioner rulings because these legal setbacks to Uber are in the nature of a clarion call to class action lawyers to look closely at these on demand companies to see whether there are lawsuits to be filed," Reibstein said.
Lawyers have heard the call, and many of the on-demand companies are, indeed, facing these lawsuits. Shannon Liss-Riordan, a Boston-based employment lawyer, has filed both in court and in arbitration class-action cases against Uber, Lyft, Instacart, Shyp, Washio, Homejoy, Caviar, and Postmates.
Even in the face of litigation, both Uber and Lyft remain steadfast in their hiring of independent contractors.
"Uber has not received notice of these claims so we are unable to comment on the specifics of each case, but it's important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control," an Uber spokesperson said. "Most driver partners can and do choose to earn their living from multiple sources, including other ride sharing companies, and, like the vast majority of independent contractors in the U.S., 73% of Uber partners say they would rather have a job where they choose their own schedule and are their own boss than a steady 9-5 job."
Like Uber drivers, Lyft said their drivers like staying independent contractors.
"Lyft drivers are not employees," a Lyft spokesperson said. "They use Lyft, and other on-demand services, as a flexible and reliable way to make ends meet without having to be stuck in a schedule that doesn't work for them. We hear from drivers that this flexibility is one of the main reasons they choose Lyft."