France’s highest appeals court has become the first to declare that a former Uber driver should be recognized as an employee rather than an independent worker. With similar cases ongoing in the U.S. and U.K., this case is part of a “global battle” and has set a precedent for how employees are regulated in the gig economy.

Details of the Case

France’s Cour de Cassation upheld an appeals-court ruling that found the former driver’s “status as an independent contractor [as] fictitious” because he had a “relationship of permanent legal subordination” to the company. Essentially, the court said that because Uber (1) dictated the terms of its drivers’ work, like their rates and routes, and (2) had the ability to “sanction them” when they violated Uber’s rules, the former driver should be considered as an employee.

Uber’s main arguments in this case have been that all its drivers have no obligation to work and can connect to the app when they wish, making them independent contractors. But, the court countered saying that being able to choose one’s working hours doesn’t excluding him or her from being classified as an employee.

Unfortunately, this decision will not automatically affect the employment status of all drivers in France. But the court’s opinion does send a strong signal, providing additional legal grounds to any Uber driver who seeks to demand reclassification by a French employment tribunal.

In response to the ruling, Uber released the following statement:

“This decision relates to the case of one specific driver, who hasn’t used the Uber app since 2017. The ruling does not reflect the reasons why drivers choose to use Uber: the independence and freedom to work if, when and where they want.” 

Uber has also indicated it has no plans to change its business model since most of the existing cases in France only involve former drivers asking for severance payments. But an Uber spokeswoman clarified that if a current driver were to petition to change their employment status, Uber “would have no choice but to terminate the agreement with the driver as our app isn’t built for this model (as of now).”

The State of Gig Economy in the U.S.

In the U.S., Uber is facing increasing challenges, especially in California. Last year, Assembly Bill 5 (AB 5) was passed, which reclassified many gig economy workers making them eligible for corporate benefits such as health insurance, sick days and minimum wage.

AB 5 codifies the Dynamex Operations West, Inc. v. Superior Court of Los Angeles case, establishing a test that employers must pass to legally classify their workers as independent contractors. If employers do not meet the test, they must treat their workers as employees.

However, Uber has stated that it meets the “ABC” test and, as such, does not need to reclassify its drivers as employees. They even made a series of changes to give drivers in California more autonomy to boost this claim. Now, drivers in California can see where their riders are going, effectively having the chance to choose which trips they want to take.

Since last year, Uber and other companies that rely on gig workers (such as Lyft, Postmates, and DoorDash) have joined forces and raised more than $110 million for a ballot initiative this year. This initiative aims to reverse AB5 by guaranteeing protections to gig workers that don’t exist yet, such as:

  • 30 cents for each mile driven to account for costs;
  • Health-care subsidies for drivers who work 15 hours or more a week; and
  • Occupational-accident insurance coverage while on the job.

If this ballot measure wins, it would prevent further legal challenges and invalidate any current litigations based on the law.

Conclusion

The stakes for Uber are high. With the classification of drivers being challenged all around the world, Uber has stated in its 2019 annual report that any reclassification “would require [them] to fundamentally change [their] business model, and consequently have an adverse effect on our business and financial condition.”

Currently, more than 100,000 drivers in the U.S. “have filed (or expressed an intention to file) arbitration demands” against Uber with similar classification claims. With France’s recent ruling, this number may rise and ultimately force Uber and other major gig economy players to rethink their operations and business model.

If you are a business in need of assistance with matters regarding employee classification, please contact Hackler Flynn and Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post.

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