Uber is now facing a potentially huge class action lawsuit over its employment model

On Tuesday, a federal judge in San Francisco granted class action status to a lawsuit by three Uber drivers who argue that they are more employees than independent contractors, as Uber contends. The class includes up to 160,000 Uber drivers in California, as long as they have not waived their right to class-action arbitration. Uber says that leaves a small number of potential plaintiffs, while the lawyer representing the drivers says it will include many thousands, and many more if the class action is widened to include all U.S. Uber drivers.

Class action suits generally give plaintiffs more leverage, and if the case ultimately goes against Uber, the car-service startup could be forced to pay for its drivers' Social Security, workers comp, unemployment and health insurance, and automotive maintenance costs. That would upend Uber's entire business model and possibly affect other companies based on the "sharing economy." Uber says it will appeal Judge Edward Chen's ruling, while plaintiff lawyer Shannon Liss-Riordan tells The Wall Street Journal that she and her clients "will seek reimbursement for expenses, as well as tips that were not distributed to Uber drivers, around the country."

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