Uber was blocked from requiring its drivers to sign a complex new labor agreement by a federal judge in California Thursday. It's the latest development in an ongoing class-action lawsuit that is not going so well for the $62.5 billion ride-hailing company.
Last week, Uber drivers nationwide received notice through their apps of a new agreement, which would resolve disputes with Uber in private arbitration rather than in court. Drivers were prompted to accept the contracts in order to keep working, or they could opt out within 30 days, but would have to email Uber specifically to do so. The agreements were sent out two days after Judge Edward Chen decided to expand the scope of damages and participants in the lawsuit.
Over the course of a two-and-a-half-hour hearing Thursday, Chen blasted the ride-hailing company for introducing the new contracts that he characterized as confusing and ill-timed. A lawyer for the plaintiffs had sought to block the agreements from going into effect. Uber argued it was simply trying to clear up any lingering confusion.
The gig economy is under the microscope
Chen said the agreement appeared to be an attempt by Uber to manipulate the class-action lawsuit, which is set to go to trial next summer. He said the contracts were "likely, frankly, to engender confusion" and ordered Uber to consult with the court before issuing similar notices to its drivers in the future, according to Ars Technica.
Uber's lawyer argued the new agreements were a response to Chen's displeasure with the previous contracts. "This court had ruled that provisions were unlawful, unconscionable and unenforceable," Theodore Boutrous, the attorney, said in court, according to Bloomberg. "The agreement that was sent out addresses the things that this court was troubled by, it fixes those things."
"Likely, frankly, to engender confusion."
Drivers involved in the lawsuit are seeking to be reclassified as full-time employees of Uber, rather than independent contractors. They say that because Uber controls important parts of their work, like fares and who can and can't work on the platform, they should be entitled to certain protections and benefits. Uber says this would subvert the very nature of its business. It argues that a majority of its drivers prefer Uber because of the flexibility it affords them.
Last week, Seattle's city council approved legislation to allow ride-hail drivers for Uber and Lyft to unionize. Meanwhile, Uber is quietly supporting a slate of bill in other states that would statutorily define its drivers as independent contractors. And the gig economy keeps rolling on.