Mobile-app-driven driver services, Uber and Lyft, each face separate lawsuits seeking class action status in San Francisco federal court. The cases have been brought against the companies by their drivers, alleging they have been misclassified as independent contractors instead of employees and are entitled to reimbursements for expenses such as gas and vehicle maintenance.
Currently, the drivers pay for such expenses themselves, an article in Reuters reported. According to Reuters, Uber is the most valuable U.S. startup, valued at $40 billion. Lyft has raised some $331 million from various investors.
At a hearing on Thursday, January 29th, U.S. District Court Judge Vince Chhabria, the judge presiding over the Lyft lawsuit, said that it was “very difficult” to decide whether the drivers were employees or independent contractors. However, according to the judge, California law appeared to favor employee status.
At a hearing the following day, U.S. District Court Judge Edward Chen, the judge presiding over the Uber lawsuit, added that Uber had a “tough argument” to make that its drivers were independent contractors. He further commented that a jury might have to decide the issue.
Both judges have yet to issue final rulings on the cases.
It is unclear how much money is at stake in the lawsuits because the drivers have not stated an amount they are seeking as compensation. However, because the lawsuits seek class action status, the amount could be substantial. In fact, if successful, the lawsuits could potentially undermine both companies’ entire business models, which insist they are nothing more than software platforms pairing up those seeking a ride with those who have cars.
On March 11, 2015, U.S. District Court Judges Edward Chen (the judge presiding over the Uber case) and Vince Chhabria (the judge presiding over the Lyft case) both ruled that a jury must decide whether Uber/Lyft drivers are employees or independent contractors. Recognizing that the drivers had the characteristics of independent contractors in some respects, but characteristics of employees in others, Judge Chhabria wrote, “A reasonable jury could go either way.”
The rulings rejected Uber and Lyft’s arguments that the drivers must, as a matter of law, be considered independent contractors.
You can read more about the decisions here.