Uber wins key ruling in its fight against treating drivers as employees

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A federal appeals court handed Uber a significant win Tuesday in its battle to avoid having its drivers declared to be legal employees. Uber has asked the courts to throw out the lawsuit, because Uber's driver agreement requires this kind of dispute to be handled in private arbitration instead—an endorsement that the 9th Circuit Appeals Court has now accepted.

Uber says that its drivers are legally independent contractors, not employees. That's significant because federal law strictly regulates the relationship between employers and employees. Employees are guaranteed to earn federal minimum wage and are entitled to overtime pay if they work more than 40 hours per week. Uber employees, in contrast, are paid by the ride and might earn much less than minimum wage if they drive at a slow time of day.

California law also gives employees the right to be reimbursed for expenses they incur on the job, which would be significant for Uber drivers who otherwise are responsible for gas, maintenance, insurance, and other expenses of operating an Uber vehicle.

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