Uber’s $4.4M EEOC harassment settlement followed by new employee class action

Just as Uber announced a $4.4 million settlement with the U.S. Equal Employment Opportunity Commission to resolve claims alleging a business-wide perpetuation of sexual harassment culture and retaliation, the ride-hailing company was hit Wednesday with a class action alleging misclassification of its workers.

Filed in the Northern District of California, the class action claims Uber has misidentified its ride-hail drivers as independent contractors rather than employees since April 2018, following the California Supreme Court's ruling in Dynamex Operations West, Inc. v. Superior Court, (2018) 4 Cal. 5th 903. The ruling has since been codified into law as Assembly Bill 5, which will take effect Jan 1.

The proposed class of 50,000 to 75,000 current and former Uber drivers seeks damages for labor code violations, retroactive employment benefits, wages and unpaid overtime, said Ronald L. Zambrano, employment litigation chair for West Coast Employment Lawyers, which filed the action. Nicholas v. Uber Technologies, Inc., 19-CV08228 (N.D. Cal, filed Dec. 18, 2019).

"Dynamex has been the law of the land in California since 2018," Zambrano said in a statement. "If Uber won't treat its drivers the way they deserve, then the court needs to step in to enforce the law."

The case is expected to be among the first of many class actions alleging misclassification against the San Francisco-based company. Uber has said repeatedly it plans to continue classifying its workers as contractors and fight any lawsuit claiming otherwise. The company also launched a $90 million ballot initiative with fellow "gig economy" companies Lyft Inc. and DoorDash Inc. in October to carve out an exemption to AB 5.

Calls to Uber were not answered by press time Wednesday.

The news comes as Uber settled claims Wednesday with the federal employment commission that it permitted a culture of harassment and would retaliate against anyone who complained. The $4.4 million will go into a class fund for anyone the commission finds suffered either harassment or retaliation since Jan. 1, 2014, the agency said Wednesday in a press release.

Uber will also undergo an overhaul of its harassment policies under the direction of former commissioner Fred Alvarez, identifying employees who have been the subject of multiple complaints and managers who failed to respond in a timely manner, the agency said. Alvarez will monitor the company for three years.

"This agreement holds Uber accountable, and, going forward, positions the company to innovate and transform the tech industry by modeling effective measures against sexual harassment and retaliation," EEOC Commissioner Victoria Lipnic said in a statement.