Uber and Lyft are the defendants in separate class action lawsuits filed in federal court in San Francisco. Both lawsuits are brought by drivers for the companies, and the plaintiffs are seeking to be declared employees rather than independent contractors. As employees, drivers would be entitled to a minimum wage, reimbursement for expenses, overtime and other benefits. Plaintiffs’ attorney Shannon Liss-Riordan discusses the lawsuits in this report.
Liss-Riordan says that both cases are well on their way towards trial. Summary judgment motions in both cases have been overruled. The cases will turn on factual questions whether the drivers are being treated as independent contractors or, in fact, as employees.
Liss-Riordan points out that the most important issue will be the amount of control each company has over its drivers. She opines that both companies exercise a good deal of control over drivers. “[The companies] give them rules, they tell them how they want them to act, and they monitor their behavior.” Passengers provide the companies with feedback and rate the drivers. The drivers have to meet certain quality levels based on passenger ratings in order to remain as drivers. Local managers decide the acceptable ratings levels, and the levels are high.
The companies also advise the drivers if a passenger complains or says a driver is doing something that he or she shouldn’t do. A driver can be deactivated from the Uber or Lyft system at any time. That level of control, says Liss-Riordan, points to employee status, although there are other factors as well.
Both companies use the independent contractor model and suggest that their profitability depends on using this model. However, even though this model works well for the companies, it does not necessarily work as well for the drivers. Liss-Riordan says that both companies are “enormously successful” and would probably continue to be so whatever a court might rule on the independent contractor issue. “Uber is reportedly worth $50 billion today.” And, under California law, an employer is required to reimburse an employee for expenses necessary to do the job, including fuel costs, vehicle maintenance, and other related expenses.
Liss-Riordan believes that the companies will continue to be successful if they have to treat their drivers as employees and assure that the drivers are earning at least minimum wage. Whether this would be true for other companies is not an issue in this litigation. She opines that a company should not take on the apparent status of an employer if the company is unable to handle the responsibilities that go along with it.
One common argument for the independent contractor model is that drivers very much like the flexibility of being their own bosses. But Liss-Riordan points out that employers are able to provide this flexibility, and it is a growing trend in the business world. And there are other things that go along with being an employee, including unemployment benefits and workers’ compensation.
Shannon Liss-Riordan is a principal in Lichten & Liss-Riordan, P.C. in Boston. Her practice concentrates on class action litigation involving failure to pay wages, overtime, gratuities, minimum wage, and misclassification of employees as independent contractors. She represents employees throughout Massachusetts and nationally. The Legal Broadcast Network is a featured network of the Sequence Media Group.