U.S. states pass laws backing Uber's view of drivers as contractors.

State legislators in Ohio and Florida are moving ahead with regulations governing Uber and other ride services that would designate all drivers as independent contractors, bolstering a critical but much-disputed aspect of Uber's business model.

The states would join North Carolina, Arkansas, and Indiana in requiring the contractor designation as part of new laws governing so-called transportation network companies.

The contractor provisions of the current and proposed laws in the five states have not previously been reported.

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Uber has built its business on the contractor model, arguing that its smartphone app simply connects riders and drivers, who own their cars and pay their own expenses.

But Uber is fighting a class-action lawsuit in California by drivers who said they should be treated as employees. Many of a group of 160,000 California drivers could potentially be part of the class, according to a judge's ruling Dec. 9, and possibly be eligible for back pay and reimbursement of expenses.

The contractor requirement in the new state laws could help Uber limit the potential damage if it were to lose the California lawsuit and also head off similar challenges in other states.

An Uber spokeswoman said the company supported the Arkansas, Indiana and North Carolina laws, as well as the pending Ohio and Florida bills. She declined to comment on the company's involvement in drafting those laws, however.

In Ohio, state Rep. Bob Hackett said Uber, Lyft, the taxi industry and other parties were involved in drafting the bill. At one point, Uber sent five representatives to a meeting with members of the insurance industry to negotiate language in the bill, Hackett said.

"I believe they are independent contractors. And the bill says the State of Ohio believes that they are independent contractors," Hackett said.

The state Senate cleared the bill on Wednesday, sending it to the House. Sponsors in both houses said they expected it to be approved.

Bills on the designation of Uber drivers have also been introduced in New Jersey and Alabama but they have not been enacted.

Uber ruling adds more drivers to class-action suit

A California judge ruled Wednesday to expand a class-action suit that could challenge Uber Technologies Inc.'s fundamental business model. As a result of the ruling, Uber drivers who didn't opt out of an arbitration agreement in their contracts can be added to the class-action suit.

It wasn't immediately clear how many drivers that covers, but the drivers had previously sought to certify a class of 160,000.

In September, the same federal judge-U. S. District Judge Edward Chen-granted class-action status to a lawsuit brought by three drivers who claim they are Uber employees, not contractors, and therefore deserve health benefits and other expenses normally covered by an employer. At the time, Judge Chen's decision applied only to Uber drivers in California who had opted out of a class-action arbitration agreement.

On Wednesday, the judge ruled that Uber's arbitration agreement was unenforceable. “This is a significant ruling on both counts and we are very pleased with it", said Shannon Liss-Riordan, an employment lawyer with Lichten & Liss-Riordan PC in Boston, who represents the drivers.

Global enterprise

Uber operates in more than 300 cities in 67 countries and has raised $7.4 billion from investors. Its war chest has helped fund legal and regulatory battles across the world, and lobbying efforts at the state and national levels.

Source: Reuters and Migalhas International