Juries to Decide Whether Uber, Lyft Drivers Are 'Employees'
Uber and Lyft continue to "disrupt" their way right into court, where drivers for each company allege in separate lawsuits that they're employees, not independent contractors.
The companies, of course, claim that their drivers -- excuse me, "partners" if you're Uber -- are independent contractors, meaning Uber and Lyft don't have to pay the "employer" part of the payroll tax or otherwise abide by wage and hour laws that apply to employees but not contractors.
We Swear We're Not a Transportation Company
Judge Edward Chen, hearing the Uber case, denied Uber's motion for summary judgment, as he couldn't conclude that Uber drivers were contractors as a matter of law. Chen explained, because drivers provide a service to Uber, there's a rebuttable presumption that the drivers are Uber employees. Drivers (whom Uber selects at its sole discretion) also don't set their own prices, and Uber depends on those drivers -- not on the distribution of its software -- for its revenue.
Uber continues to maintain that it's not actually a taxi company providing ride-for-hire services. Instead, it says, it's a "lead generation platform," basically a technology company that puts independent-contractor drivers in contact with potential fares. Chen called this argument "fatally flawed in numerous respects" because all its technology is focused exclusively on giving rides to fares and developing methods for facilitating rides. "Uber is no more a 'technology company' than Yellow Cab is a 'technology company' because it uses CB radios to dispatch taxi cabs," Chen said.
Judge Vince Chhabria, also in San Francisco federal court, made a similar ruling in the Lyft case. "At first glance, Lyft drivers don't seem much like employees," he began, then added later, "But Lyft drivers don't seem much like independent contractors either." Like Chen, Chhabria said Lyft drivers perform functions of both employees and independent contractors. Like employees, they don't have particularly special skills, their work is central to Lyft's business, Lyft sets the price of their work, and Lyft can fire them. But like contractors, they can serve multiple clients, they own their own tools, and they get to decide whether they take fares at all.
Sharing Economy? More Like Regular Economy
Both of these cases are now going to juries, who will decide whether the drivers are employees or independent contractors. As envisioned by the people operating companies like Uber, Lyft, and Airbnb, the "sharing" economy is a brand new way to "disrupt" the old economy and blur the lines between employees and contractors.
In reality, though, sharing economy companies aren't disrupting anything: They've just found a loophole through which they can foist the duties of an employee on someone without any responsibility on the employer's part. It's kind of like an illusory promise from contract law: "I promise to pay you if I feel like it." Uber and Lyft's protestations that "partners" are contractors, and they're not transportation companies, are a little too cute to survive.
- Court: Juries to Decide If State Uber, Lyft Drivers Are Employees (San Francisco Chronicle)
- Uber Sued Over Unlawful Business Practices; Lyft Settles (Los Angeles Times)
- States v. Startups: When Laws and Innovation Clash, Who's to Blame? (FindLaw's In House)
- Uber 'Gratuity' Lawsuit Can Move Forward, Federal Judge Rules (FindLaw's California Case Law Blog)