Uber ruling suggests contractors cannot engage in class-action suits

Dive Brief:

The 9th U.S. Circuit Court of Appeals in San Francisco ruled a class-action lawsuit over background checks should be handled between the company and contracted drivers individually, the Wall Street Journal reported.
The case was originally filed by two workers in 2013 who were barred from driving for Uber due to credit issues, according to Reuters.
The appeal court's decision is a win for Uber, but a large blow for labor advocates who saw the Uber class-action case as a precedent for other contract-based worker versus company cases and hoped an effective class-action lawsuit would bolster legal arguments for considering contractors as employees with benefits.

Dive Insight:

Legal decisions can have a large ripple effect, and Wednesday's decision barring a class-action lawsuit against Uber by independent contractors is a huge blow for various ongoing cases that claim the independent contractor model is exploited in the modern economy.

Distributors, trucking agencies and parcel delivery services are among the sub-sectors of the supply chain that rely on independent contractors to ensure cheap prices. As legal disputes on the subject of independent contractors ramp up, these sub-sectors' business models are increasingly threatened.

The legal disputes vary, but they revolve around an ambiguous legal definition of what work can be considered independent. Also at issue is company compensation for work-related expenses, such as gasoline, the right to minimum wage and the right to unionize and barter for rights before the company.

Wednesday's decision damages the legal assumption allowing independent contractors to associate, while also decreasing the potential penalties for contractor-based companies' mishaps against non-employees.

However, the battle is far from over. XPO Logistics is still undergoing a lawsuit for misclassifying their drivers, and the Department of Labor has issued guidelines claiming contractors who are economically dependent on the company should not be classified as independent contractors.