A lawyer for the drivers vowedto keep fighting Uber's business model — common in the sharingeconomy — that classifies drivers as contractors instead ofemployees. (Photo: Diego M. Radzinschi/ALM)

Uber Technologies Inc. drivers suffered a major defeat in one ofthe gig economy's most closely watched labor fightswith a ruling barring hundreds of thousands of drivers fromsuing as a group for better pay andbenefits.

Tuesday's decision by a federal appeals court in San Franciscowasn't unexpected after the U.S Supreme Court in May bolstered the power of employers to forceworkers to use individual arbitration instead of class-actionlawsuits.

A lawyer for the drivers vowed to keep fighting Uber's businessmodel — common in the sharing economy — that classifies drivers ascontractors instead of employees.

Related: A new era for the gig economy? 2 new suitschallenge gig worker classification

“Thousands of drivers have already signed up for individualarbitration,” Shannon Liss-Riordan said in an emailed statement.“If Uber wants to resolve these disputes one by one, we are readyto do that — one by one.”

Uber spokesman Matt Kallman said the company is pleased with thecourt's decision.

Liss-Riordan sued Uber in 2013 and the case grew to represent asmany as 385,000 current and former drivers in California andMassachusetts when a San Francisco judge granted class-actionstatus.

But in 2016, just weeks after the judge rejected a $100 millionsettlement of the suit, the San Francisco appeals court ruled in adifferent case that Uber's arbitration agreements with drivers arelargely valid and enforceable. The same panel decided Tuesday'sappeal, also in Uber's favor.

Along the way, the Uber drivers lost the federal government asan ally when the Trump administration withdrew support filed ontheir behalf by the National Labor Relations Board during the Obamaadministration. The Trump administration said the board's previousposition was “no longer sustainable” under the May Supreme Courtruling.

The dispute about the status of Uber drivers is far from over,said Charlotte Garden, a law professor at Seattle University.

“The legal landscape for California drivers has improved,because the California Supreme Court recently adopted a relativelyemployee-friendly test to separate employees from independentcontractors in at least some types of workplace claims,” she saidin an email.

Classifying drivers as contractors saddles them with expenses,such as car mileage and maintenance while the company saves moneyby avoiding the cost of benefits including sick leave and healthinsurance.

The appeals court case is O'Connor v. Uber Technologies Inc.,15-17420, U.S. Circuit Court of Appeals for the Ninth Circuit (SanFrancisco). The lower-court case is O'Connor v. Uber TechnologiesInc., 13-cv-03826, U.S. District Court, Northern District ofCalifornia (San Francisco).

Read more about the push for benefits for gigworkers:

• App brings portable benefits to gigworkers
• The full-time health needs of part-timeworkers
• Democrats come to the aid of gig workers with newlabor law proposal

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