Uber attempt to face down what could be one of the greatest threats to the core of its business model during a court appearance Thursday.
Uber will make its case to Judge Edward M. Chen, who presides over a district in northern California, that a lawsuit aimed at reimbursing 160,000 California drivers for work-related expenses should be stopped from proceeding as a class action. The central dispute over whether drivers should be classified as employees and, therefore, be entitled to a host of benefits or whether they retain their status as independent contractors.
Much of the controversy surrounding the issue arose in June after a California Labor Commission decided Uber driver Barbara Ann Berwick was an employee, not an independent contractor. As a result, the commission said Uber owed her $4,152.20. The non-binding ruling however only applied in this individual case.
The ride-sharing company argues that the lawsuit can’t be considered a class action if it doesn’t represent the majority of Uber drivers. The plaintiffs counter that the $50-billion company’s ability to fire drivers with relative ease proves the Uber’s status as an employer.
As it stands, Uber focuses on providing and developing its app and drivers who use it to pay a percentage of their fare to the company. This arrangement allows Uber to keep costs down and cheaper services are then provided to customers.
Speaking to Techcrunch in July, after Uber filed the brief opposing the lawsuit, Ted Boutrous of law firm Gibson Dunn said, “We have driver after driver explaining their unique circumstances, why freedom and autonomy are so important to them in their own words, in sworn testimony. All of that goes right to the heart of our argument why this can’t be a class because for there to be a class everyone must be similarly situated, they must have suffered the same injuries, allegedly.”
If the plaintiffs are successful it could hamper Uber’s profit growth and serve as a model for the company’s opponents to hike its costs. In London, the GMB Union, a long-time opponent of Uber, is filing a similar case to those seen in California.
“A successful legal action against Uber could see substantial payouts for drivers, including compensation for past failures by the company to make appropriate payments to who we argue are their workers,” said GMB’s lawyer Nigel Mackay.
Making matters worse, Uber’s finances may not be as in order as CEO Travis “Whenever I have a bad day, I just look at our overall revenue graph” Kalanick has let on.
Late Wednesday, Gawker’s Sam Biddle published what looks to be internal (and previously confidential) finance reports, and they don’t look pretty. If true, the documents would indicate that Uber may actually be losing money — and that this case may be bigger for Uber than initially thought.
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