In May, Uber Technologies, Inc and Lyft, Inc. abruptly removed their services from Austin, Texas. As a result, thousands of drivers in the area lost their jobs. Two of those former drivers, Todd Johnston from Uber and David Thornton from Lyft, filed two proposed California class action lawsuits. In response to new regulations that were implemented, the two companies moved out of Austin, Texas.
The plaintiffs’ attorney indicated that the success of the suits depend upon the same common issue that Uber and Lyft have been battling in various forums: the question of whether drivers are misclassified as independent contractors. The two previous drivers cited the Worker Adjustment and Retraining Notification Act (WARN) as a basis for their lawsuits. According to the statute, employers who have 100 or more employees working 20 or more hours a week (on average) must provide 60 days notice before a mass layoff or plant closure resulting in a mass layoff. The goal of this particular legislation was to provide workers with the opportunity to find alternative employment, find and arrange for any necessary or advantageous retraining, make accommodations for loss of pay, etc.
The plaintiffs claim that Uber and Lyft’s departure from Austin, Texas resulted in 10,000 drivers contracted to operate in the city being “laid off.” According to the wording in the above cited statute, this type of action (resulting in the “laying off” of more than 500 workers) calls for an appropriate notification. Legal experts viewing the case indicate that the plaintiffs face an uphill battle as for the statute to apply to the situation, laid off workers must have been “employees.” Uber and Lyft classify their drivers as independent contractors – a classification that comes with significantly different rights and benefits in comparison to workers classified as employees.
In April an unrelated lawsuit reached a settlement with terms dictating that drivers are to be considered independent contractors – not employees. Having noted that, we have yet to see a definitive court ruling on this particular issue. So while it will be an uphill battle for these plaintiffs to establish themselves as “employees” of Uber and Lyft in the eyes of the court, the possibility is there.