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The Sharing Economy Takes Another Hit: A class is certified in the Uber lawsuit.


Uber's attempts to keep its business model afloat took another hit this month when a federal judge granted class-action status to a lawsuit claiming the company treats its drivers like employees without providing the necessary benefits.

A 68-page court ruling from U.S. District Judge Edward Chen in San Francisco held that the lawsuit applies to all drivers in California who didn’t waive their right to the class-action arbitration.

Of course, the bigger significance of the ruling is that the sharing economy continues to suffer, as does the more general concept of modern day employment where workers are empowered to be their own bosses but also assume their own risks.

Uber has raised billions of dollars based on that idea of modern day employment where it is merely selling a technology platform connecting drivers and passengers - and distinctly choosing not to take on the burden of employees and their expenses. But Uber's positioning is proving untenable.

In a statement, an Uber spokeswoman said the company plans to appeal Judge Chen’s decision to certify class-action status and clarified that the ruling only permits a minority of California drivers to join the class, as most drivers waived their right to class-action arbitration when Uber updated its driver contract last year. The suit aspired to certify a potential class of all 160,000 people who had driven for the company.

Also, in August 2015, the California Employment Development Department (EDD) determined that a former Uber driver was an employee rather than an independent contractor. To support this decision, EDD cited that the company controlled every aspect of the driving experience, in addition to having the ability to terminate the driver at will. This focus on the amount of control a company has over its workers has been a common theme throughout all of the similar sharing economy lawsuits; the more control a company has over its workers, the more likely they will be found to be employees. In this case, Uber was asked to pay unemployment benefits to the former driver after that person was ruled an employee.

While the verdict is still out in the civil suit, the news so far for the sharing economy and the independent worker is not good, although some newfound "employees" will be celebrating.