By: Samantha Fournier
Uber Technology (“Uber”) is no stranger to lawsuits. In 2015, fifty federal lawsuits were filed against Uber, which is more than three-times as much as Lyft, Uber’s closest competitor.[1] The contents of these lawsuits vary from the five-star rating system, whether the drivers are employees, and insurance disputes.[2] Uber repeatedly settles the cases; however, so many of these issues have not been discussed by courts.[3]
Recently, Uber was accused of manipulating its mobile application to pay drivers less when charging passengers more.[4] Allegedly, the application shows drivers shorter, more direct routes for a lower fee; meanwhile, the route shown to customers is longer with a higher cost.[5] As a result, the drivers receive commission on the lower fee even though the passenger was charged the higher amount.[6] The lawsuit was brought in the Central District of California, and the plaintiffs are requesting their rightful commissions that reflect their contribution to company earnings.[7]
Uber has consistently categorized its drivers as independent contractors.[8] According to the IRS, an independent contractor does not “perform services that can be controlled by an employer.”[9] Furthermore, “if an employer-employee relationship exists (regardless of what the relationship is called),” the worker is not an independent contractor.[10] Uber maintains that it is simply the connection between self-employed drivers and passengers.[11] Labor laws guarantee employees certain rights, such as minimum wage and maximum hours.[12] By classifying its drivers as independent contractors, Uber does not have the legal requirement to provide these rights to its drivers.
The Department of Labor issued a field guide which lays out factors to be considered when addressing whether an independent contractor is actually an employee.[13] Additionally, the Labor Department lists factors that should not be considered relevant for a determination of the worker’s status.[14] The Supreme Court adopted an economic reality test to determine worker status instead of applying the master-servant test used by common-law.[15] The economic reality test assesses whether the employee is economically dependent on the employer; whereas, the master-servant test evaluates who controls the employee’s work.[16] The economic reality test used by the Court has thirteen factors, and they must be analyzed in the totality of the circumstances.[17]
Contrary to Uber’s belief, international courts and state revenue departments have found Uber drivers to be employees rather than independent contractors.[18] One of the many factors that Uber satisfies is that drivers typically have an “Uber” sticker on their car windows when driving for Uber, thereby connecting their vehicle to the company.[19] While the drivers do not have a uniform, the sticker connects the car to the company making that driver a representative of the company like an employee.[20] Also, while the drivers do not have required hours, Uber does keep track of hours or minutes the drivers spend working for Uber.[21] Logging onto the app works much like “punching in” at an office and the drivers get paid, much like hourly employees, for the minutes they spent “punched in.”[22] Since Uber typically settles all its lawsuits, there is no official court ruling in the United States to confer employee status to Uber drivers.[23]
Uber’s misclassification of its independent contractors coupled with the avoidance of paying their earned wages exemplifies its mistreatment of its drivers.[24] Uber is not obliged to pay drivers minimum wage.[25] Thus, with the current accusations, Uber is paying its drivers far less than what they expect to earn.[26] In order for Uber’s drivers to be treated fairly, Uber should recognize its drivers as employees and pay them accordingly.
[1] Kristen V. Brown, Uber is Facing a Staggering Number of Lawsuits, Fusion (Jan. 25, 2016, 7:00 AM), https://fusion.net/uber-is-facing-a-staggering-number-of-lawsuits-1793854270
[2] Ellen Huet, Uber is Paying $20 Million to Settle a Government Lawsuit Over Driver Pay, Chi. Tribune (Jan. 19, 2017, 5:09 PM), https://www.chicagotribune.com/bluesky/technology/ct-uber-ftc-driver-settlement-blm-bsi-20170119-story.html; Kristen V. Brown, Here’s Whats Going on With All of Those Uber Lawsuits, Fusion (June 16. 2016, 5:18 PM), https://fusion.net/heres-whats-going-on-with-all-of-those-uber-lawsuits-1793857601.
[3] Huet, supra, note 2.
[4] Dick Hogan, Uber Ride Service Would Bring Controversy, News-press (Sept. 10, 2014, 10:53 PM), https://www.news-press.com/story/money/2014/09/10/uber-ride-service-bring-controversy/15421511/
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Internal Revenue Service, Independent Contractor Defined, IRS.GOV (last accessed Apr. 11, 2017), https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined.
[10] Id. (emphasis added)
[11] Hogan, supra, note 2.
[12] Fair Labor Standards Act of 1938, 29 U.S.C. §§ 203, 206, 207
[13] Wage & Hour Div., U.S. Dep’t of Labor, Field Operations Handbook ch. 10b06 (Oct. 20, 1993), https://www.dol.gov/whd/FOH/FOH_Ch10.pdf (last visited Apr. 11, 2017).
[14] Id. at ch. 10b07.
[15] Bartels v. Birmingham, 332 U.S. 126, 130 (1947); Katherine V.W. Stone, Legal Protections for Atypical Employees: Employment Law for Workers without Workplaces and Employees without Employers, 27 Berkeley J. Emp. & Lab. L. 251, 257-58 (2006). (listing the thirteen factors: “whether the putative employer has the right to hire, fire and set daily working conditions; whether the worker is paid by the hour, week, or month, instead of a set amount for completing a specific job; whether the worker receives benefits; the extent to which the work was a part of an integrated process; the degree of skill required to perform the work; the permanence of the working relationship; whether the worker has invested in the business; whether the putative employer owned the premises and equipment where the work was performed; whether the services are integral to the business the putative employer’s amount and degree of control over the work process; the employee’s liability for loss or profit; the employee’s initiative, judgment, or foresight in open market competition; and the degree to which the work is an independent operations”)
[16] Stone, supra, note 15 at 257.
[17] Id. at 258.
[18] See J.B. Wogan, Employee r Independent Contractor? It’s the Uber-Important Question of Today’s Economy, Government Technology (June 3, 2016), https://www.govtech.com/policy/Employee-or-Independent-Contractor-Its-the-Uber-Important-Question-of-Todays-Economy.html (discussing the Florida Department of Revenue’s decision to award unemployment benefits to an ex-Uber driver) Cf. Tom Mendelsohn, Court: Uber Drivers are Company Employees Not Self-Employed Contractors, ARS Technica (Oct. 31, 2016, 9:43 AM), https://arstechnica.com/tech-policy/2016/10/uber-drivers-employees-uk-court-ruling/ (disseminating a court decision that declared Uber drivers in the UK employees not independent contractors).
[19] Wage & Hour Div., supra, note 13, at ch. 10b07.
[20] Id.
[21] Uber, www.uber.com (last visited Apr. 11, 2017) (explaining that a driver should “simply log in to the app and start earning money”).
[22] Id.
[23] Huet, supra, note 2.
[24] Hogan, supra, note 4.
[25] Id.
[26] Hogan, supra, note 4.