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Uber’s Defense in California Driver Class-Action Lawsuit: 'LOL Laws LOL'

The company kind of has a point—we do need better labor laws. Just not the ones Silicon Valley is promoting.
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(Illustration: Susie Cagle)

Four hours into the hearing, the judge was clearly growing impatient. It was Uber’s last opportunity to argue its case before Judge Edward Chen ruled on whether or not the ride-hailing company’s California drivers could move forward with a class-action lawsuit, alleging they’ve been misclassified as contractors instead of employees.

Uber’s lead attorney, Ted Boutros, argued that the company’s tens of thousands of drivers were all so different that they couldn’t be reasonably allowed to sue as a class. “Doing it all at once, 160,000 people, it’s a risky gamble for the system,” Boutros said.

If Uber has come to represent the exuberant lawlessness of tech industry start-ups in their race to domination, the company is also a good test case for the potential and limits of that lawless logic.

Chen rested his chin in his hand and smirked. “If you were confident in your case, it would be a good gamble.”

But Uber is not apparently confident that it has not broken the law—Uber is confident in its ability to get what it wants despite the law. A few weeks after that hearing, Chen certified the class, ruling the suit could move forward, though Uber vowed to appeal.

If Uber has come to represent the exuberant lawlessness of tech industry start-ups in their race to domination, the company is also a good test case for the potential and the limits of that lawless logic.

Uber doesn’t really object to the cost of making its drivers employees—it objects to the idea of doing so. Uber argues that it is not an employer, but rather a marketplace: a platform matching people seeking service (a ride) with service providers (drivers). The additional price tag on employee drivers would be nothing compared to the loss of investor confidence in Uber’s ability to hug the law at top speeds without crashing into it.

Uber attorney Ted Boutros’ main arguments against certifying drivers as a class hinged on ideology: That many people like driving for Uber as contractors, and shouldn’t be forced to participate in a class-action lawsuit that seeks to rob them of that notional freedom.

Uber’s very high driver turnover rate would seem to undermine this argument, but there are still many Uber drivers who may well not want to be employees. Uber’s labor arrangement is not entirely unlike that of the cab businesses it profoundly disrupted.

“The taxi industry has always been at the cutting edge of these really problematic shifts, and for that reason it's been so available to immigrant workers,” says Veena Dubal, a labor researcher and professor at the University of California–Hastings School of Law. “Older white drivers really want to be employees and have focused so much of their energy and advocacy around shifting drivers legally back to an employee definition, whereas a lot of immigrant drivers embrace their independent contractor identity.”

This clash arises as more educated, privileged workers are forced from middle-class jobs into contingent work, a fringe that’s long been the realm of women and people of color—and not only because it’s considered less stable and desirable. “Part of what people told me about why they stay in the industry is they feel like it’s the one place in their life where they have control,” Dubal says. “I think this is why Uber and Lyft is so much more appealing on an individual level even though it's worse from a regulatory standpoint.”

Some Uber drivers have even taken advantage of the contractor model, creating their own subcontracted mini Ubers, with their own fleet of cars and drivers but using Uber’s platform. An employment model would effectively put them out of business.

Of course, what makes a worker happy is immaterial to the law: Even if you want to be paid less than minimum wage, your employer can’t legally do that. And if your co-workers sued and won, you could get back pay along with them as an involuntary plaintiff.

“There’s public interest that transcends any individual views” on labor law, Chen told Boutros, including “promoting fair competition between companies.”

But Uber wants to change that law, and they’re hardly alone. The specter of a new “dependent contractor” work status has been haunting discussions of tech sector labor for the better part of 2015. Proponents say it would provide a necessary option in the gray area between employees and independent contractors—the gray area that’s been such a target of opportunity for companies like Uber. But for people apparently intent on legislative reform, advocates of such an option often raise more questions than they answer. How would dependent contractors be taxed under United States law? Would they be personally liable for their work, or would their employer be liable? Would they receive workers’ compensation? All open questions.

Proponents point to the existence of similar laws in Canada and Germany—rather socialist laws that they may not have read closely. Canada’s dependent contractor law does not require hiring companies to take on worker liability or pay benefits, but it does require that those workers receive notice before termination or a hefty severance package, just like employees. They’re also allowed to unionize and collectively bargain—which many of Uber’s happy contractors say they’d love to do. And further benefits or restrictions on benefits are allowed specific to different industries where workers may be more or less vulnerable, depending on particular circumstances of their work.

Uber and its defenders have a point: It’s true that U.S. labor laws are old and in some ways terribly outmoded. But these laws were not the product of corporate lobbying on behalf of inflated investor valuations with the ultimate intent of further bloat and wealth concentration. Labor laws were enacted during the Depression, in the interest of poor, exploited workers. In an economy supposedly recovering by way of low-wage job growth, we’d do well to remember this.

But there is also plenty of room for reform. Those laws leave independent contractors incredibly vulnerable: Independent contractors pay higher tax and insurance rates and bear total liability for their work even when it is done for hire for others. They cannot formally unionize and they enjoy no rights against discrimination or harassment in their work. Yet under current law, many of those contractors—truck drivers, house cleaners, landscapers—wouldn’t meet the “employee” standard.

On the other hand, Uber drivers probably are employees—they own their own cars and set their own hours, but Uber controls most aspects of how they work. This class-action suit may make work much better for many of those drivers. But if employment misclassification is to end and conditions for contract workers are to improve, labor advocates will have to start playing the same game as Uber. Misclassifying workers would be far less attractive (and more difficult) if all workers began on a level playing field. And the only way to do that is to disrupt the law.

The Crooked Valley is an illustrated series exploring the systems of privilege and inequality that perpetuate tech's culture of bad ideas.