Uber, Lyft and the Questions around the “Ride-Share” Economy


Who get’s left behind?

Ride sharing is great, right? Whether it’s Uber or Lyft… Everybody seems to be using it. Everybody likes it. It’s a reliable, relatively inexpensive and low-hassle way to get around. If it’s arrived where you live, why not? But now that the shiny “newness” of the ride share economy has worn off, questions are beginning to be raised. Consumers, governments, and workforce alike are looking closer at the effects of this new offering.

We’re “Just the App”

All of these “sharing” start-ups employ the independent contractor model. All of the ride-share apps claim that their workers are independent contractors, not employees. They insist,“We’re just the app that connects people. These are not our employees. Thus, they are not our responsibility.” Multiple lawsuits filed against these companies are challenging that claim. These lawsuits are being filed faster than they can find defense attorneys to fight them. Is it possible for a company with this business model to continue to fit the definition of a true contractor? In order to serve the public they must manage their workforce in a way that maintains consumer safety.  These companies screen to various degree for bad actors. Those applicants with violent criminal backgrounds or prior sex offenses must be winnowed out.

Among defendants in suits across the nation for failure to monitor for these issues are: Uber, Lyft, Instacart, Homejoy, Caviar, and Postmates. Can these companies be held responsible for the shortcomings of their contractors? Is the “contractor” classification sufficient to protect them when a driver beats up a passenger?

It’s the Wild West Out There

Uber and Lyft face new lawsuits almost daily. Tim Anderson, a cab driver in Northwest Florida, filed suit alleging unfair competition. He claims that by skirting the hefty municipal fees for taxi-type services, the ride-share startups have positioned themselves to hit the market at an artificially lowered fare. He has accused them of “stealing” his customers.  In Minnesota, a disabled man is suing Uber for failing to accommodate his service dog in compliance with the Americans with Disabilities Act. The parents of a six-year-old girl who was hit and killed by an Uber driver in San Francisco on New Year’s Eve, 2013, ultimately reached a settlement with Uber for an undisclosed amount.

Yeah, but it’s Safe, Right?

The questions raised by all this litigation do need to be answered. The public should understand that the cost of a cheaper taxi ride service may be an assumption of greater risk or less protections. A lower fare may mean a disabled patron is refused a ride. If these companies aren’t employers, they aren’t necessarily covered by the ADA. Getting in that cheaper cab may mean your driver has a criminal record that went undetected in a cursory background check. It may mean he or she does not have sufficient insurance to cover an accident, nor the the injuries you might suffer. Whatever it means, people are free to assume any risk, provided they understand that they are doing so in advance.

The Catch

The more a company exerts control over its workers in an attempt to address these perceived inadequacies, the less that workforce can be presumed to be independent.

As a result of increased company dictates to drivers by Uber and Lyft, class actions have been filed against both companies, alleging that they are mis-classifying their employees as “independent contractors.” Plaintiffs’ attorneys allege that the popular ride-share companies have mis-classified their workforce in order to cut labor costs.  The companies’ response? Emphatically not. Whether they are employers or not is a matter for a jury to decide, and it’s going to be a tough call.

Consumers Versus Contractors

Uber, Lyft and other startups whose model is based on the “shared” service economy, may be trying to have it both ways. The companies can keep prices low because they do not have the expense of employees. But while a flexible “independent” workforce might seem a business-model dream, problems have arisen. The expectations of the American consumer is that services they utilize be safe, compliant with the law, and forthright in their dealings with the public. It is difficult to fulfill those wishes without exerting a level of control that is inconsistent with an independent relationship.

Everybody Has An Opinion…

…Including the California Labor Commissioner. Currently Uber is appealing a ruling that found their drivers to be employees. If the decision is upheld, or should Uber or Lyft lose the class actions, these companies may have to rethink their business model. If they cannot rely on establishing a lack of an employer-employee status, they lose their “disruptive” edge. It will also mean that smart-phone users may pay more for these services in the long run.

The Societal Costs

Sharing economy companies say they cannot undertake the greater liability and additional costs of items like social security payments, workers’ compensation insurance, and unemployment insurance and survive. So they will fight to keep the independent contractor status viable.

There is a societal cost in having massive amounts of the American work force working as independent contractors. Workers who are self-employed have opted out of the social safety net. Their numbers are growing. Some are completely unaware of the responsibilities that come with being self employed. Without appropriate accident insurance, for example, both workers and the public can be burdened with unpleasant consequences. Society has become accustomed to certain expectations of liability on the part of our service providers. Consumers expect to be safe in these vehicles. Passengers expect to be properly insured if and when tragedy does occur. American laborers expect to be provided the benefits of employment when they take what feels like a job.  As a result, there are many who are beginning the discussion of how to craft the safety net of items like social security and health insurance around the “independent” workforce. It will be a challenge for our legislators.


The cases for mis-classification will make their way through the court. Ultimately, these issues will be decided. In the meantime, think carefully when choosing a ride-share over a cab.  If you are a driver, working for companies like Lyft, and Uber, educate yourself on issues like the tax requirements of self-employment. There is more at stake than the cost of the ride. Everyone needs to be clear on what benefits they can, and cannot, expect.

If you believe you have been mis-classified at your place of employment, contact Lazear Mack at 510-735-6316. We’re here to help.

Lazear Mack, LLP
Employment Law Attorneys
436 14th Street, Suite 1117
Oakland, CA


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