Uber Technologies Inc is anticipated to face a lawsuit in California regarding the coverage of work-related expenses for drivers. This decision has the potential to significantly impact companies operating within the largest state in the U.S.
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NEW YORK, NEW YORK - MAY 10: The Uber banner hangs outside of the New York Stock Exchange (NYSE) before the Opening Bell at the NYSE as the ride-hailing company Uber makes its highly anticipated initial public offering (IPO) on May 10, 2019 in New York City. Uber will start trading on the New York Stock Exchange after raising $8.1 billion in the biggest U.S. IPO in five years.
Facing California Lawsuit
The Supreme Court of California has ruled that Uber Technologies Inc must confront a lawsuit in which it is accused of not adequately compensating UberEats drivers for their work-related expenses. According to a report from Reuters, this will not only be a win for workers but also seen as a victory for advocates of labor rights.
In a unanimous decision, the California Supreme Court stated that despite UberEats driver Erik Adolph signing an agreement to resolve his work-related legal claims through private arbitration, he still retains the right to file a lawsuit on behalf of a significant number of workers.
The court emphasized that Adolph's agreement did not waive his state law right to pursue legal action collectively. As per Michael Rubin who represents Adolph, the employer associations have been closely monitoring the case, arguing that a ruling in favor of Adolph would lead to an increase in lawsuits aimed at extracting money.
California's Law PAGA
The California Supreme Court has clarified that workers are not prohibited by law from pursuing individual claims through arbitration while simultaneously pursuing collective claims in court. Mint reported that Uber is facing a lawsuit under California's Private Attorney General Act (PAGA).
This will give workers the power to sue their employer for violating employment law on behalf of the state. Through PAGA, employees will also be allowed to keep one-quarter of any money they win in the case, while the remaining victory amount goes to the state to fund an agency that enforces labor laws.
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Following Previous Case
In response to this, a Lawyer from Uber called Theane Evangelis stated that the recent ruling conflicts with the Viking River decision, which violates the requirement to enforce valid arbitration agreements. She stated, "We are considering our appellate option."
A U.S. Supreme Court decision in June 2022 regarding another California case, Viking River Cruises Inc. vs. Moriana. The LA Times reported that the Court determined that PAGA infringed upon employers' rights. This leads to the dismissal of claims from other employees since the employee who opted for arbitration would no longer be able to continue the litigation.
However, Justice Sonia Sotomayor of the Supreme Court expressed her own concurring opinion, emphasizing that the issue of standing under PAGA should be determined by state law rather than federal law. As a result, she referred the matter back to the state of California for resolution.
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