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Paul Zimmerman

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Misclassification Class Actions Take a Back Seat

The corporate folks at Uber Technologies Inc. have cause to be uber-happy given the outcome of a recent appeal before the Ninth Circuit – a decision that sends a clear message to employers throughout the West.

The peer-to-peer ridesharing company had been facing a class action lawsuit filed on behalf of drivers claiming to be Uber employees, as opposed to independent contractors as classified when hired and as reflected in agreements they signed with the company. The stakes in the case were high and potentially quite costly for Uber: among other things, reclassification would potentially require reimbursement for gasoline and vehicle maintenance and trigger minimum wage and overtime laws.

To Uber’s delight, however, the Ninth Circuit overturned class certification, and as a consequence, hundreds of thousands of aggrieved drivers are now left to pursue individual arbitration claims to determine their employment status, assuming they choose to take that route (pun intended). This holding was not unexpected in the wake of Epic Systems Corp. v. Lewis, in which the U.S. Supreme Court ruled (somewhat recently) that companies like Uber can use arbitration agreements to prohibit workers from bringing or participating in class or collective actions over workplace issues (read: wage/hour claims and the like).

Without question, the determination by the Ninth Circuit in O’Connor v. Uber serves as an important reminder for all employers – arbitration agreements with class action waivers are an effective and U.S. Supreme Court-approved tool to avoid class litigation.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.