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How California Became Uber’s Biggest Threat

Posted on May 16, 2016 Author:

Last week, we discussed how Uber settled a class action lawsuit in California over claims its drivers were employees and not independent contractors. It appears two more lawsuits have been filed against the ridesharing company for the exact same reason, only this time in Florida and Illinois.

Due to Uber settling, California drivers who were not part of the settlement could still file additional lawsuits. With two new lawsuits filed in other states, this possibility could become a reality.

Uber settled for $100 million because it did not want the class action lawsuit against it to go to trial, where it may have been held liable for over $800 million in damages. In fact, Uber settled for about 12 percent of what it may owe drivers. If a federal judge rejects the settlement, Uber may still be on the hook for the remaining amount, as the case would go to trial.

What is at stake for Uber if this class action lawsuit goes to trial? The recently settled lawsuit claimed Uber mislabeled drivers as independent contractors. If the allegations against Uber go to trial, it may owe drivers unpaid overtime, work-related expenses such as gasoline and car repairs, and unemployment benefits for terminated drivers.

Will California Courts Reject Uber’s Settlement?

Lyft attempted to settle with its drivers for $12.25 million, but a federal judge rejected the settlement, as it only accounted for 9 percent of the potential damages. Uber may face a similar fate, but only time will tell.

In many ways, California courts have become a major obstacle for Uber, a company valued at over $50 billion. If Uber’s settlement is rejected and the case goes to trial, it could be on the hook for hundreds of millions of dollars and forced to rethink its business model.

The Los Angeles labor law attorneys at Kesluk, Silverstein, Jacob & Morrison, P.C. can help workers recover unpaid wages.