A federal judge on Tuesday granted class-action status to a suit filed by Uber drivers who argue they are treated like employees but paid as contractors who receive no benefits.
US District Court Judge Edward Chen ruled that the suit filed in Northern California by several Uber drivers also covers UberBlack, UberX and UberSUV drivers dating back to mid-August of 2009 in the state.
The judge found that Uber drivers' relationship with the company was similar enough for them to be represented as a class in the case.
The suit filed against Uber Technologies argues that drivers qualify as Uber employees as opposed to independent contractors and, as such, are deserving of benefits and protections called for by California labor law.
In particular, those behind the suit contend that Uber has failed to reimburse drivers for expenses or losses related to doing their jobs and has failed to pass on tips from riders.
Part of the lure of Uber is that people summon rides and pay using smartphone applications, with transactions going through Uber and no need for cash on hand. Uber allows for tip-free rides.
Chen's ruling was focused on whether the suit qualified to represent Uber drivers as a group and did not address merits of the case.
"While we are not surprised by this court's ruling, we are pleased that it has decided to certify only a tiny fraction of the class that the plaintiffs were seeking," an Uber spokesperson told AFP.
"That said, we'll most likely appeal the decision as partners use Uber on their own terms, and there really is no typical driver -- the key question at issue."
Cracks have begun to appear in the model developed by Uber and other peer-to-peer services.
Lawsuits in several jurisdictions argue that on-demand workers are not independent contractors, but rather employees entitled to unemployment insurance, workers compensation and other benefits.
Politicians are taking notice.
Democratic presidential front-runner Hillary Clinton said recently she would "crack down on bosses who exploit employees by misclassifying them as contractors."
"This on-demand, or so-called gig economy, is creating exciting economies and unleashing innovation," she said in June. "But it is also raising hard questions about work-place protections and what a good job will look like in the future."
Yet without a flexible workforce of independent contractors, "the sharing economy could be stopped in its tracks," said Christopher Koopman, a research fellow at George Mason University's Mercatus Center.
"We would not see the dynamic, innovative environment we have today."
Uber has been maintaining an aggressive international expansion plan, despite fierce opposition in some countries from regulators and established taxi industry players.
San Francisco-based Uber says it operates in some 250 cities and 58 countries. Its app allows smartphone users to connect with drivers and bypass traditional taxi services.
Despite its spectacular growth, Uber has faced troubles in many countries. The company decided to suspend its low-cost service in France after a nationwide taxi strike in protest against Uber turned violent.