Picture this: you’re enjoying a lovely evening with friends inside a hole-in-the-wall restaurant in Brooklyn.  As the evening is winding down, the clouds open up and give way to a torrential down-pour.  You think to yourself, “How am I possibly going to hail a cab in this weather…and in Brooklyn of all places.”

Brooklyn

Luckily, you remembered, you downloaded Uber, the mobile application that connects you with a personal driver.  Within minutes, you receive a notification that your driver is outside waiting for you!

What does this vignette have to do with wage and hour recent developments and highlights?

Earlier this month, a California judge held that out-of-state drivers for Uber Technologies Inc. could not participate in a putative class action that alleged the company violated various California laws, despite a choice of law provision in their licensing agreement with Uber that designated California as the governing law.

Uber drivers in 3 states: California, Georgia and Washington brought a class action suit against Uber claiming it violated CA law by falsely advertising that customers did not need to tip drivers since a gratuity is included in the total cost of the service.  The drivers claimed that Uber did not in fact provide the full gratuity to drivers.  The second part of the claim was that Uber misclassified them as independent contractors instead of employees.

Uber sought to dismiss the claims as they applied to drivers who both lived and worked outside of California arguing that CA law applied nationwide because the relevant state laws did not include geographical limitations.  Uber also argued that the choice of law provision in the licensing agreement overcame any presumption against extraterritorial application of those laws.

The Judge found that the licensing agreement’s choice of law provision did not overcome the “presumption against extraterritorial application” of the state laws the drivers claimed Uber violated.   The judge found the lower court reached the wrong conclusion by interpreting Gravquick A/S v. Trimble Navigation International, Ltd., 323 F.3d 1219 (9th Cir. 2003) incorrectly.

The decision held that a contractual agreement to apply California law “must yield” to laws containing explicit geographic limitations, the court said. “There is no logical reason to reach a different result where that limitation is implicit.”

For employers, it will be interesting to monitor the outcome of this case.  Many companies contain similar choice of law provisions, and so far this case is educational in how those provisions will be applied when employees from other states seek to join a class suit.