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The Uber Employee Lawsuit: An Overview

Updated on October 21, 2015

Uber has recently been taken to court over claims of mis-classifying its drivers. In the newest class action lawsuit, the drivers argue that the company should classify them as employees and not as independent contractors. They hold that Uber should reimburse them for their personal expenses on operation activities like gas and vehicle maintenance. They also challenge Uber’s practice of not giving them gratuities and telling their customers not to give tips.

In a similar Uber employee lawsuit, filed by an individual Barbara Ann Berwick, the company was ordered to reimburse the complainant $4,152.20 in expenses. The ruling held that she should have been classified as an employee and not an independent contractor during the period which she used Uber’s drivers’ app. However, in a quick rejoinder, the company appealed the ruling, and Berwick’s reimbursement will have to wait until the appeal is determined.

If Berwick’s lawsuit and the class action lawsuit sail through and the complainants get their way, all the drivers who use Uber’s app to source for customers will have to be treated as employees. For that reason, the company will be obligated to offer them employee benefits such as insurance and retirement benefits. The company’s management thinks that it is not structured to operate in such a manner, and therefore, there is no room for considering the drivers as employees.

A Complex Matrix

The case against Uber seems to be a complicated matrix considering that there are so many factors in play. On one hand, the fact that Uber has a significant influence on the functions of the drivers puts the company in an employer’s position. A typical employer is one who can control the manner in which tasks are performed. For example, Uber advises’ drivers on how they should dress. On the other hand, it is a fact that Uber has no control over the operations of the drivers. The company can only give them advice, but it cannot implement them. It has no control over drivers’ working hours or patterns. In fact, drivers have the liberty to choose whether to use the company’s app or not. That paints a rather contrary picture to what the complainants in Uber employee lawsuit claim. It proves that the company has no ability to act as an employer.

In its defense, Uber argues that it is not sensible to classify it as an employer considering that the over 160,000 drivers who are part of the class action lawsuit have little or nothing in common except for having downloaded and used the company’s app. Furthermore, the company is adamant that it should consider the drivers as independent contractors because there are no set standards for all of them. Factors such as amount and how drivers use the Uber app vary from one driver to another, and there is no way of standardizing such factors. Over 400 drivers from California have come out in support of Uber. They argue that he differences in terms of agreements grant drivers a lot of freedom and liberty to do whatever they wish. That is flexibility that a normal employer cannot offer. I believe that Uber drivers should remain as contractors not as drivers. There are plenty of employee jobs and few places that allow you to make a little cash in your spare time.

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Uber Employee Lawsuit

What Are Uber’s Core Functions?

Uber is a Silicon Valley company that deals with technology. Its core function is developing the Uber smartphone app that links drivers with riders. If a rider is in need of a car, he or she can simply access the app and order for one from the nearest available driver. Note that the vehicles used belong to the drivers or cab and taxi companies that have employed them. Uber does not own any transportation vehicles. In that capacity, Uber describes itself as a software platform that partners with car owners. Currently, it has operations across six continents and in over 300 cities.

Is Uber A Virtual Employer?

This case is not unique to Uber. In the past, companies that operate on the same basis as Uber have come into sharp focus with regards to whether they offer the required form of employment. Lyft (Uber’s competitor) and Instacart are among the companies that have been on the receiving end of similar cases. Just like the other two (Lyft and Instacart), Uber holds that its relationship with service providers (drivers) should not be judged as an employer-employee relationship. That is justifiable and true in every measure because the company operates in a virtual marketplace where riders meet drivers with a touch of a button using an app that is powered by Uber.

Other Rulings

That interaction is by no means a definition of employer-employee relationship. In fact, it is more inclined towards freelancing because apart from facilitating the link between a rider and a driver, Uber has no control over the drivers’ work environment. The company seems to be fully justified in categorizing the drivers as independent contractors. It even issued a statement stating that five states (including Texas, Pennsylvania, and Georgia) have made rulings that Uber’s drivers should be considered as independent contractors. Legally speaking, one would think that federal law should be consistent and if five states think that the drivers are independent contractors so should California.

An Uber Employee Is Economically Impractical

If the court rules that all the drivers who are using Uber’s app should be classified as employees, the company’s current model and structure will be rendered untenable. However, there is no business model under which the new structure can be categorized. The ruling would make the drivers employees’ who own the vehicles and make rules for themselves. Economically speaking, they are neither employees nor freelancers. That would call for a third category that lies between the two (employee and freelancer). In the event that Uber loses the case, many other companies that work in the virtual market will feel the ripple effects. They include Lyft, Postmates, Homejoy, and Instacart; all of which have similar cases filed against them in courts. The consequences could be detrimental not only for the technology sector but the whole economy. This should be a very big consideration in the jury’s decision as far as Uber employee lawsuit is concerned.

Finally, a ruling against the company would also be impractical because most of the Uber drivers also work under similar companies as Uber (such as Lyft and Sidecar). The companies are competitors, and if Uber is ordered to become an employer, it will be forced to force them to pick only one app. Otherwise, there would be no way of determining the same privileges that the drivers are demanding. For example, if a driver what criteria would be used to establish whether it is Uber or Lyft that is supposed to compensate a driver who had both apps on at the same time?

In summary, the facts surrounding Uber employee lawsuit make the ruling a hard one. However, it is evident that both parties in the case will be served better by the status quo.


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