By
Ashwani Patel
In October 2020, Lex Leaks and a group of other Uber drivers filed a lawsuit against Uber alleging the company misclassified drivers as independent contractors instead of classifying them as employees.[1] However, the Illinois U.S. District Judge, Martha Pacold, held that the group of Uber drivers will have to individually arbitrate their misclassification dispute against Uber.[2] Uber is a ride-sharing company that, among other things, “match[es] consumers looking for rides and independent providers of ride services”.[3] Thus, Uber classifies their drivers not as employees, but third-party contractors.
However, the Uber drivers are arguing that they are being misclassified and they should be employees of the ride-sharing company.[4] The Federal Arbitration Act (“FAA”) states that arbitration requirements do not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”[5] Thus, the Uber drivers are arguing that under this FAA exemption, the drivers fit this classification and thus arbitration requirements should not apply.[6] The Uber drivers argued that they fit this categorization because the drivers occasionally “transport passengers across state lines and to and from airports and that Seventh Circuit precedent supported their position.”[7] However, Judge Pacold disagreed with such argument and stated “that ‘someone whose occupation is not defined by his engagement in interstate commerce does not qualify for the exemption just because she occasionally performs that kind of work.’”[8]
Judge Pacold cited decisions in other circuits that have held similar holdings, such as the Ninth Circuit’s opinion in Capriole v. Uber Techs. Inc., and the New York federal court’s opinion in Davarci v. Uber Techs. Inc.[9] In Capriole, the Ninth Circuit held that the district court properly granted Uber’s motion to compel arbitration because its drivers did not fall within the “interstate commerce” exemption to mandatory arbitration under section 1 of the FAA.[10] In Davarci, the court held that the rideshare drivers did not fall within the category of the FAA exemption because the vast majority of rideshare drivers’ trips were purely intrastate.[11] Moreover, the court explained that the drivers’ business did not “inherently implicate interstate commerce; the business is more accurately described as a primarily local, intrastate function.”[12] The court further added that the mere fact the “local trips involves transportation to an airport or train station does not alter the fundamentally local nature of those trips such that Uber drivers are part of the flow of interstate goods and persons.”[13]
The Leaks’ attorney compared the work Uber and Lyft drivers perform to Amazon delivery drivers, who are exempt from FAA arbitration requirements.[14] The implications to this classification are huge for Uber drivers. As independent contractors, the drivers lose a lot of benefits. Under federal wage laws, independent contractors are exempt from minimum wage, overtime pay, and expense reimbursements.[15]
[1]. See Lauraann Wood, Ill. Uber Drivers Must Arbitrate Misclassification Claims, Law 360 (Feb. 23, 2022), https://plus.lexis.com/document/?pdmfid=1530671&crid=26242f5f-7784-4ad5-ad88-7cbcfc792f73&pddocfullpath=%2Fshared%2Fdocument%2Flegalnews%2Furn%3AcontentItem%3A64VM-B501-F016-S3X3-00000-00&pdcontentcomponentid=122080&pdteaserkey=&pdislpamode=false&pdworkfolderlocatorid=NOT_SAVED_IN_WORKFOLDER&ecomp=ff4k&earg=sr22&prid=bb56e143-2794-4a33-ae2b-746df4ac90cf.
[2]. See id.
[3]. Uber’s Technology Offerings, Uber, https://www.uber.com/us/en/about/uber-offerings/(last visited Mar. 13, 2022).
[4]. See Wood, supra note 1.
[5]. Federal Arbitration Act, 9 U.S.C. § 1 (1947).
[6]. See id.
[7]. See Wood, supra note 1.
[8]. Id.
[9]. Id.
[10]. See Capriole v. Uber Techs., Inc., No. 20-16030, 2021 U.S. App. LEXIS 22738, at *40 (9th Cir. Aug. 2, 2021).
[11]. See Davarci v. Uber Techs., Inc., No. 20-CV-9224 (VEC), 2021 U.S. Dist. LEXIS 157948, at *21 (S.D.N.Y. Aug. 20, 2021).
[12]. Id. at *20.
[13]. Id. *38.
[14]. See Wood, supra note 1.
[15]. See id.