A legal face off in a San Francisco courtroom could decide the future of Uber and other ride-sharing companies.
Three Uber drivers are suing over their classification as independent contractors.
The case has huge implications because it challenges Uber’s entire business model. If the court decides that Uber drivers are employees, then the company could be obligated to pay expenses, workers compensation, unemployment insurance and other benefits.
Uber argues its drivers are wildly different and therefore should be seen as independent contractors. The other side is arguing that all the drivers are more alike than different because they all operate for the benefit of Uber and all must conform to Uber’s rules.
Out in front of federal court Thursday afternoon, Uber, which has traditionally steered clear of reporters, put on a rare news conference. Uber’s attorney Ted Boutrous had drivers lined up behind him. They’re some of the 400 drivers who, he said, oppose reclassification as employees.
“The No. 1 thing that draws me to this app is the freedom of scheduling,” Uber driver Sarah Napp said.
On the other side are Uber drivers who say they should be reimbursed for expenses, like gasoline, and would be if they were classified as employees.
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At UC Hastings College of Law, law professor Reuel Schiller said this is about a lot more than gas expenses.
“There’s workers compensation. There’s unemployment insurance. There’s Social Security payments,” Schiller said. “There’s withholding taxes. There’s protection of our collective bargaining laws.”
All of that could put Uber out of business. The company is valued at $51 billion, but it’s been losing money as it grows and changing its business model, and adding a huge financial burden isn’t in the cards.
A decision not expected for several weeks.
