Court rules against Uber in a big win for California workers

(Reuters) – The state Supreme Court said on Monday that Uber Technologies Inc. (UBER.N) must face a lawsuit in California alleging it would have covered the labor expenses of Uber Eats drivers, in what could be a major blow to companies in the largest US state and a windfall. for labor advocates.

California Supreme Court Unanimous ruling Uber Eats driver Eric Adolf said he has not waived his right under state law to sue on behalf of a large group of workers even though he signed an agreement to present his work-related legal claims in private arbitration.

Adolph sued Uber in 2019, claiming that the company wrongly classified UberEats drivers as independent contractors rather than employees, who must be reimbursed for business expenses under California law.

California’s unique law called the Special Attorney General’s Law, or PAGA, allows workers to sue for labor law violations on behalf of the state and keep a quarter of the money they earn. The rest goes to the state to fund an agency that enforces labor laws.

The California Supreme Court said nothing in this statute to prevent workers from pursuing claims on their behalf in arbitration while separately litigating large-scale claims in court.

The decision likely undermines the significance of a 2022 US Supreme Court ruling on Viking River Cruises that said companies can force individual PAGA claims into arbitration, and could mean California employers will face more wide-ranging lawsuits.

Thean Evangelis, an attorney for Uber, said in a statement that Monday’s ruling contradicts the Viking River decision and violates federal law that requires enforcement of applicable arbitration agreements.

“We are studying our appeal options,” she said.

Michael Rubin, who represents Adolph, said the ruling could prompt companies to reconsider forcing workers to arbitration if wide-ranging PAGA litigation can still be pursued in court. Robin also represented the plaintiff in the Viking River case.

More than half of nonunion private sector workers in the United States are required to sign arbitration agreements as a condition of employment. The agreements usually prevent them from filing or participating in traditional class action lawsuits.

Critics of mandatory arbitration say that it discourages workers from bringing individual claims involving small amounts of money, and that workers who bring disputes to arbitration are more likely to lose.

Business groups contend that arbitration is faster and more efficient than court, allowing workers to recover more money. Trade groups applauded the Viking River ruling last year, saying it would prevent California plaintiffs from using PAGA as a method of arbitration.

Groups including the US Chamber of Commerce, the nation’s largest business lobby, Submitted notes In Monday’s case, the California Supreme Court warned that a ruling against Uber could encourage workers to file baseless lawsuits and pressure the companies to settle them.

But the court said those concerns should be directed at state lawmakers, who have the power to change the law.

Additional reporting by Daniel Wiesner in Albany, New York, and Alison Frankel in New York; Editing by Alexia Garamfalvi and Josie Kao

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