There are likely few people who have not heard of the phenomenon known as “ridesharing.” The concept of calling for a ride from a complete stranger is not a new one (i.e. Taxi service), but with new technology came what many called a massive improvement in available services for riders. Within a very short time after rideshare applications became a reality on smartphones, two companies began to dominate the landscape. Lyft and Uber are now names that are synonymous with ridesharing and app-driven services. While their pasts have thus far been on parallel trajectories, the future of each company may be seeing its first divergence that may impact both companies more than anyone can predict. The impacts will surely also be felt throughout the world of employment litigation.
Both rideshare companies have been the target of litigation for some time now as drivers have come to realize what it truly means to be a contractor/employee for the companies. When ridesharing first became known, drivers flocked to each company with the promise of independence from a more traditional workplace. This independence, they later discovered, came with a price. Specifically, neither company classified the drivers as employees, but rather they were considered independent contractors. At the time of the first contracts between drivers and the rideshare giants, this arrangement was on par with employment trends around the country. As time went on, however, drivers began to wonder just how much of the promised independence was false as the companies seemed to exert more and more control over the “what, where, when” than drivers initially bargained for when they signed their contracts. The loss (or perceived loss) of their independence brought with it complaints of wrongdoing and missing benefits that would otherwise be provided by an employer to its employees; and this perception laid a path directly into the courtroom.
Much of what has been reported about the lawsuits has focused on the plaintiffs’ point of view, rather than analyze how Uber and Lyft have responded. Their arguments paint a very different picture. Specifically, Uber and Lyft argue that the contracts between them and their drivers should be honored as each driver knowingly entered into the independent contractor relationship, for better or worse. The companies contend that they do not exert sufficient control over each driver so as to warrant employee status and point to factors such as working hours as evidence of their hands-off style. Where these two companies are seeming to differ is in their litigation strategy. Uber has chosen to fight what has now become a class of drivers in what likely will be protracted litigation. Lyft on the other hand has chosen to settle with its drivers for an up-front payout of $12.5 million, rather than continue on toward the unknown. Some argue that Lyft’s contracts allowed for more leverage for the company due to its arbitration clause, but it still makes one wonder why Uber is still choosing to fight.
Perhaps Uber knows something that we all do not and sees a victory at the end of the long road of litigation? Whatever the reason, what is true is that if Uber’s gamble does not pay off for the company, their persistence may prove to be Lyft’s gain as it is now able to continue operations as usual while at the same time learning from any new courtroom developments. This advantage could allow Lyft to morph its business model to fit the law and avoid costly litigation or penalties that currently face Uber.
As we all continue to watch for new developments in the Uber litigation, the law office of Garcia & Gurney will also be ready to adapt with the law. Our team of professionals consistently stays on top of the law as it happens so that we can be prepared to provide the best representation possible for our clients.