California Uber Drivers Settle Misclassification Claims for $8.4 Million

On February 17, 2022, a class of 1,322 California drivers announced an $8.43 million settlement (the “Settlement”) with Uber Technologies, Inc. (“Uber”) to resolve claims in James v. Uber. The Settlement, which comes in the wake of a $20 million initial settlement between Uber and a class of 15,000 California and Massachusetts Uber drivers in O’Connor v. Uber, compensates drivers for damages incurred after O’Connor and before the enactment of Proposition 22, a period between February 28, 2019 and December 17, 2020 (the “Settlement Period”).

Proposition 22 (“Prop 22”) was a California state referendum concerning the misclassification and labor protections of app-based delivery and transportation workers. Californians voted in favor of Prop 22, thus designating app-based delivery and transportation drivers as independent contractors instead of employees. Prop 22 carved an exception into an earlier California statute, Assembly Bill 5, which classified app-based delivery and transportation workers as employees, affording them greater labor rights and protections. Accordingly, before Prop 22, Assembly Bill 5 allowed Uber drivers to make claims as employees.

Despite the drivers’ satisfaction with the Settlement, counsel for the class noted that “the question of whether Uber drivers are employees under California law” remains unresolved. Before Prop 22, California courts decided the independent contractor vs. employee inquiry using the “ABC test” from the California State Supreme Court’s holding in Dynamex Operations West Inc. v. Superior Court.

Under the ABC test, workers are only classified as independent contractors if: (a) The employer does not control the worker in performing the work, (b) The worker performs work for other entities, and (c) the worker engages in independent work similar to the work performed for the employer. All three prongs of the test must be met, otherwise a worker is considered an employee.

Since many Uber drivers only drive through Uber’s platform, the last prong of the ABC test has served as the battleground for intense legal arguments. However, now that Prop 22 has created an exemption for app-based delivery and transportation workers, Uber drivers may no longer benefit from the ABC test.

Plaintiffs in this case, filed before Prop 22 replaced Assembly Bill 5 for Uber drivers, alleged that Uber intentionally misclassified them as independent contractors. Plaintiffs further alleged that, because they should have been classified as employees, Uber failed to provide them sick leave as required under California state law. The Settlement resolves these and several other employee benefit-related claims.

The case caption for this action is James et al. v Uber Technologies Inc., Case No. 3:19-cv-06462, filed in the U.S. District Court for the Northern District of California.

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