The attorney representing Uber drivers in the class action lawsuit
challenging drivers' classification as independent contractors filed charges against the $50 billion dollar company with the National Labor Relations Board today.
Shannon Liss-Riordan, who has filed similar class action lawsuits
against numerous "sharing economy" companies (including Lyft, Postmates, Caviar, and, yesterday, DoorDash and GrubHub
), is charging that an arbitration agreement Uber has required drivers to sign since June 2014 violates the National Labor Relations Act.
In June, the California Labor Commission ruled
that a single Uber driver was an employee of the ride-hail company rather than an independent contractor. That ruling did not set any legal precedents, but the Uber class action suit is widely expected to have significant ramifications for the entire on-demand economy.
Uber has pioneered a business model in which workers are classified as independent contractors and therefore ineligible for legal protections like the minimum wage, overtime, worker's compensation insurance, and the right to unionize. While some on-demand companies have decided to start hiring workers directly
, many of the most successful on-demand startups rely on the independent contracting business model.
California-based Uber drivers were granted class action status
by a federal judge on September 1, 2015.
However, the class was limited by Judge Edward M. Chen to exclude drivers who accepted Uber's arbitration agreement after June 2014. The arbitration agreement waives drivers' right to participate in class or collective action against Uber.
Uber claims that only 15,000 of the estimated 160,000 people who have driven for the company in California are eligible to join the suit. In a statement
, Uber's managing counsel for employment, Abby Horrigan, wrote: "The ruling found that only drivers who either stopped driving before June 2014 or drove after June 2014 but chose to opt out of the arbitration option in their agreements, are eligible. Most of the growth in driver numbers has happened since then — not just in California but across the United States and the rest of the world."
Horrigan also stated that Uber will likely appeal the class certification anyway.
However, the challenge to the arbitration agreements at the NLRB could thwart Uber's hopes to limit the class size.
Since 2012, the NLRB has consistently ruled
that arbitration agreements that require workers to waive their right to participate in class or collective action are illegal and unenforceable. The National Labor Relations Act, which the NLRB is charged with enforcing, guarantees workers the right to engage in concerted activity, and the NLRB believes such waivers violate that right.
"Uber is using its fine print arbitration agreements containing class action waivers to prevent drivers from being included in the class action," said Liss-Riordan by email. "As the NLRB has repeatedly held, these class action waivers are illegal under the National Labor Relations Act."
If the NLRB finds Uber's arbitration agreement to be unlawful, Liss-Riordan hopes that the judge would allow the post-June 2014 Uber drivers back into the class.
Whether the judge would agree is very much an open question, however.
Besides the NLRA, arbitration agreements are governed by the Federal Arbitration Act. The U.S. Court of Appeals for the Fifth Circuit and some other federal courts have rejected the NLRB's ruling
on arbitration agreements, deciding that the FAA trumps the NLRA.
However, the Ninth Circuit Court of Appeals — which covers California, and is where the Uber suit is pending — has not made a ruling, and the overall conflict between the FAA and the NLRA will likely have to be decided by the U.S. Supreme Court.
Liss-Riordan says that she plans to appeal Judge Chen's ruling limiting the class in any case. "In the meantime, drivers who have worked for Uber since June 2014 who want to be a part of the case can still be included by contacting us," she says.
Uber did not immediately respond to a request for comment on the NLRB charges.