Ride-hailing giant Uber was just dealt another blow in an ongoing case over the classification of its drivers in California. A U.S. judge expanded the scope of the suit Wednesday, allowing drivers who did not opt out of an arbitration clause to participate.
U.S. District Judge Edward Chen in San Francisco granted the case class-action status in September, but said drivers who had waived their right to class-action arbitration, by not opting out of a clause, could not participate. In the expansion Wednesday, Chen said parts of Uber's arbitration agreements were "unenforceable." Wednesday's news stands to widen the scope of a case that will reverberate through Silicon Valley and the broader sharing, or gig, economy, which connects freelancers with available work and includes everything from car and home sharing to hiring workers to run errands and deliver food.
The ruling could prompt the transportation start-up to reframe its business model, said industry analyst Jeremiah Owyang, founder of Silicon Valley-based Crowd Companies. If Uber has to front costs for for its drivers' fuel, insurance and other related benefits, overall business costs of course would increase.
Drivers are suing over their classification as independent contractors, instead seeking to be classified as employees. They also want reimbursement for fuel and mileage costs they have covered themselves out of pocket.