Uber Misclassification Lawsuit Gets Tossed a Second Time, With Leave to Amend

A California federal judge tossed three Uber drivers’ claims of willful misclassification a second time, while allowing them an opportunity to refile their allegations of wage and hour violations.

U.S. District Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California granted Uber Technology’s motion to dismiss on Dec. 7, 2020, finding that the plaintiffs’ amended complaint failed to offer “non-conclusory allegations” and facts to support their claims. The judge gave the plaintiffs 28 days to cure the defects and file a new complaint.

The Uber misclassification lawsuit was commenced in December 2019 as a proposed class action alleging wage violations under California state and federal labor law. In July, the court ordered 45 of the 48 plaintiffs in the lawsuit resolve their claims in arbitration, leaving three drivers, Mark G., Alexis G., and Kevin N., to argue their claims in court. Subsequently, a second amended complaint was filed in August 2020.

Specifically, the suit alleged that Uber misclassified their drivers as independent contractors when they qualified as employees under California’s AB5, causing them to lose out on overtime pay, minimum wage protections, and their right to be paid in a timely manner upon termination. The drivers also alleged that Uber failed to provide accurate wage statements and retain employment records, as required by California law.

Court Says Amended Complaint in Uber Misclassification Lawsuit Has “Factual Deficiencies”

Noting in the opinion that Uber did not present any argument that the plaintiffs do not qualify as employees, the court held it would assume the Uber drivers in the suit should be treated as employees for the purposes of deciding the motion, rather than independent contractors.

However, Judge Hamilton stated in the opinion that both parties in the Uber misclassification lawsuit didn’t consider the critical legal question of whether the drivers should have been paid for the time they spent waiting for ride requests under state and federal law, affecting the viability of the unlawful business practices claim raised in connection with it.

The judge also determined in the order the plaintiffs weren’t clear about whether their employment had terminated to support their claims surrounding Uber’s failure to promptly pay wages upon leaving employment.

The court recognized that in its previous opinion dismissing the prior complaint, it identified the factual defects of the pleading. Since it didn’t point out what was wrong with each claim, the judge said that the court couldn’t determine whether granting leave to amend the wage violations claims would be “futile.”

While the court permanently tossed the claims in the Uber misclassification lawsuit for failure to maintain business records, willful misclassification, and a claim raised under California’s Private Attorney General Act (PAGA), the wage and unlawful business practices claims survived the motion to dismiss. However, the order notified the plaintiffs that if they did not “correct the various factual deficiencies” or follow the instructions the judge outlined, the allegations would be dismissed with prejudice.

Are There Other Uber Misclassification Lawsuits?

Uber has faced several lawsuits since the passage of California’s AB5 — a law requiring workers to be treated as employees unless the three strict prongs of the “ABC test” are met. In August, the Labor Commissioner’s Office in California filed separate suits against Uber and Lyft in Alameda County Superior Court for allegedly misclassifying employees and purportedly violating the California labor laws.

In July, California Attorney General Xavier Becerra and city attorneys in Los Angeles, San Diego, and San Francisco also filed a lawsuit against Uber and Lyft seeking an injunction requiring the rideshare companies to cease their alleged misclassification practices.

Significantly, California’s Proposition 22 was passed in November, exempting rideshare companies from following the requirements of AB5 upon the law’s enactment. The new law presumes app-based drivers to be independent contractors unless specific criteria are met.

The Uber Misclassification Lawsuit is Case No. 19-cv-8228, in the U.S. District Court for the Northern District of California.