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Employment Attorney Predicts Lyft Class-Action Settlement Has Far-Reaching Implications

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Los Angeles, CACountless independent contractors and employers, not only on-demand companies and Lyft and Uber drivers, are paying close attention to the proposed Lyft settlement. “Many companies hire independent contractors, so whatever the outcome, it may have long-standing implications,” says attorney Todd Scherwin, who specializes in labor and employment law. Under California labor laws, those drivers are currently classified as independent contractors rather than employees.

The misclassification class action, first filed in 2013, reached a proposed settlement this January: Lyft agreed to pay $12.25 million to affected drivers. The settlement will also see the driver terms and conditions agreement changed to more accurately reflect the independent contractor designation. But drivers had filed the lawsuit seeking to be recognized as employees.

The reason why U.S. District Judge Vince Chhabria didn’t approve the Lyft Settlement last week is because it created a number of questions. If the intention of the class action was about plaintiffs being misclassified as independent contractors rather than employees, the settlement may not solve anything. And therein lies the problem.

Todd Scherwin defends companies in litigation similar to this one - a lot. So what is Lyft’s rationale - why settle than battle it out in court? “Litigation is expensive and if Lyft decides to fight, they could lose,” says Scherwin. “They may be thinking it’s better to pony up the money now and that will change things enough to have more power on their side - to show drivers are independent contractors. And if someone sues them later, they’ll have a stronger argument. Maybe they want to let Uber fight or take the bullet.”

So Lyft can either fight tooth and nail and win, or maybe lose, and that’ll cost them more. Or they can pay the settlement now and hope giant Uber wins in court this coming June.

Whatever the Lyft outcome, these misclassification cases represent a challenge and not just for lawyers. It’s a constant struggle for employers to decide how to classify their employees, one of the main issues with Scherwin’s clients.

“The Lyft and Uber outcomes will be determined by what standards the court and lawyers look at and what standards will be pushed forward to challenge current laws,” Scherwin explains. “When you look at the law over the years and what constitutes independent contractors versus employees, key factors suggest Uber and Lyft drivers are independent contractors. These factors are lack of control the company has over them; the ability to control when they work; and how much profit they make instead of companies telling them what to do.”

Scherwin predicts that Lyft will settle and Uber will fight. “Under the law, the way the law is written and interpreted, I believe the Uber driver is an independent contractor,” he says. “Whatever the outcome, this issue is a challenge; there will be fighting and struggling over misclassification and it will become more obvious with our sharing economy. Guaranteed we will be talking about this for months and years to come.”

The Lyft lawsuit is Cotter v. Lyft Inc., 13-cv-04065, US District Court, Northern District of California (San Francisco). The Uber case is O’Connor v. Uber Technologies Inc., 13-cv-03826 US District Court, Northern District of California (San Francisco).


Todd Scherwin is managing partner of the Fisher & Phillips LLP Los Angeles office. His litigation practice involves representing employers in various aspects of labor and employment law. Todd also counsels employers on dealing with difficult issues with their workforce including state and federal leave laws and wage-hour laws. He regularly provides human resource training to clients and speaks to employers and employer groups regarding labor and employment issues.

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READER COMMENTS

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Uber deactivated me after 4 passenger complained even though my rating was high. I transportaed over a 1000 passenger with very good rating . uber stole my time and money . I have my statement where after completing a job they took money out of my account and gave it to themselves. this a theft of service and it has happened every week i worked for uber. I also have evidence that they blacked listed me and tampered with my rating and acct . even tho i was getting 5* my rating keep going down. I was not getting any good jobs and was fooled by the app to go in high surge areas and did not get any .i have snap shots on my phone to prove this. i believe I was blacked listed after some Jewish passenger complain about me because I told them I was Palestinian, I am not but i think uber rating system is very bias and unfair , Jewish people never give 5* especially if they think you are Palestinian or Muslim and so on and so forth . I am neither but often mistakenly for one. Uber also owes me for a phone that was broken by one of its passenger . Uber has refuse to respond to me on this issue. I have ample evidence of this and witnesses. Uber does not ask why something happened instead they jus take passengers account of situation and you are convicted with out any due process . I am a taxi driver and have no choice to join uber . I am under tremendous stress now and have suffered dearly. Passenger complain about every little thing to get their money back. Uber is a flawed system and exploits us. when driving they are thousands of things that can go wrong and piss passengers off , Uber will not hear your side of story or give u a chance to voice your opinion instead they will based there design on computer algorithms. Example: Uber works navigation we are suppose to flow the gps if youre gps automatically reroute you to avoid an accident or construction or traffic the list goes on .you are immediately blamed for it .Uber does not care why. This is why uber is constantly looking for new drivers. I would like to sue Uber if someone would like to talk to me I would gladly meet with you as well as provide evidence. Thank you.

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Is this a joke? Lack of control? Wow! Who paid off this fella in a failed attempt to sway public opinion? I'm not going to bother challenging a fraud

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