Judge Denies Uber's Motion To Dismiss, Sets Up Jury Trial For 'Employees Or Independent Contractors?' Question

from the innovation-through-jurisprudence? dept

In a decision that's sure to be applauded by Uber's opponents, Judge Edward Chen has denied the ride-sharing company's request to declare its drivers independent contractors. If Uber is forced to suddenly take thousands of employees on board, along with the added expenses and liabilities such a move would entail, it's going to have a much harder time maintaining -- much less expanding -- a service that many people find preferable to the taxicab strangleholds present in many cities.

In denying the company's motion for summary judgment, Chen calls Uber out for the "narrow framing" of its "we're an app, not a company" assertions, but notes that Uber does grant its drivers enough leeway that the question cannot be completely resolved via a motion in his court. Chen also raises the spectre of further regulation -- something that's similarly unlikely to work out in Uber's favor.

The application of the traditional test of employment – a test which evolved under an economic model very different from the new “sharing economy” – to Uber’s business model creates significant challenges. Arguably, many of the factors in that test appear outmoded in this context. Other factors, which might arguably be reflective of the current economic realities (such as the proportion of revenues generated and shared by the respective parties, their relative bargaining power, and the range of alternatives available to each), are not expressly encompassed by the Borello test. It may be that the legislature or appellate courts may eventually refine or revise that test in the context of the new economy. It is conceivable that the legislature would enact rules particular to the new so-called “sharing economy.”

And then sends the case on its way to a jury trial, something he notes earlier is the only way to resolve an issue this complex. No precedent is set or will be set, at least not in Chen's court.

Until then, this Court is tasked with applying the traditional multifactor test of Borello and its progeny to the facts at hand. For the reasons stated above, apart from the preliminary finding that Uber drivers are presumptive employees, the Borello test does not yield an unambiguous result. The matter cannot on this record be decided as a matter of law. Uber’s motion for summary judgment is therefore denied.

This order disposes of Docket No. 211.

So, a case that has been running since August of 2013 may still be months away from a resolution. Uber's inability to get the suit tossed doesn't necessarily mean it's destined to become Yet Another Cab Company. It still has options, but it also has an uphill battle against plenty of incumbents… and the politicians who prefer what they know to unfamiliar market entrants.

Filed Under: contractors, employees, gig economy, labor, ridesharing
Companies: lyft, uber