On behalf of Thaler Law posted in business litigation on Tuesday, September 17, 2019.
When a person starts work for a company, he or she will have a certain classification. The way that companies classify workers affects how these individuals are paid, including whether they are eligible for overtime and a guaranteed minimum wage. The issue of classification presents a unique problem for rideshare companies that contract with drivers on an as-needed basis, and as a result, Uber is currently facing business litigation.
New laws in the state of California may change the way the company views its employees. A bill that was recently passed seems to require a reclassification of rideshare company employees, but Uber plans to debate this point in court when defending itself against the recently filed lawsuit. The plaintiff in the suit claims that the company intentionally misclassified employees per state guidelines.
The lawsuit also states that the company failed to pay drivers earned overtime, minimum wage and certain reimbursements. According to Uber, they do not owe drivers these things because they view drivers as contractors, not traditional employees. According to the new bill passed in California, employees that meet certain requirements will be entitled to benefits that include workers’ compensation, paid sick leave and more.
If Uber does have to reclassify its employees, the company will likely have to pay hundreds of millions of dollars to drivers. The company is expected to vigorously defend itself against this business litigation and fight a forced reclassification. Other companies can take heed of this situation, which underscores the importance of adhering to employment laws and the proper classification of workers.