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Uber Sued For Saving Up To $500 Million Per Year By Cheating Drivers (What Does It Mean For The Rideshare Giant?)

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Uber is being sued for saving up to half a billion dollars per year by cheating its drivers. The lawsuit filed by a Los Angeles limousine company alleges that the ride-hailing giant saves up to $500 million per year by misclassifying its drivers as independent contractors rather than employees.

The issue of Uber misclassifying its drivers as independent contractors rather than employees has been one of the most controversial topics surrounding the rideshare company ever since it became popular in the United States.

Diva Limousine Ltd. is suing Uber for unfair competition, alleging that Uber classifying its drivers as independent contractors are not only a violation of federal and state laws in California, but it also hurts its rivals in an illegal and dishonest manner.

If the limousine company prevails, Uber might be held liable for violating California labor and insurance laws. Our San Diego Uber accident attorney at the Hiden, Rott & Oertle , LLP, has reviewed the lawsuit filed by Diva Limousine in federal court in San Francisco.

How Uber might be violating California laws

The lawsuit claims that by misclassifying Uber drivers as independent contractors, the most valuable tech unicorn saves up to $500 million on the costs of paying drivers an average of $9.07 an hour, overtime, expenses, meal and rest breaks, and other benefits. In addition to that, by classifying its drivers as independent contractors, Uber avoids spending money on workers' compensation and unemployment and health insurance.

In the lawsuit, the limousine company is asking for an injunction under California's Unfair Competition Law as well as triple financial damages under the state's Unfair Practices Act. Under California's Unfair Practices Act, businesses are prohibited from engaging in price discrimination that lessens competition. "In other words," our Uber accident attorney in San Diego explains, "If the company is providing services at a low price for the purpose of hurting its competitors, its conduct may be classified as 'unfair or deceptive acts or practices in or affecting commerce'."

"Uber prices its rides below cost for the purpose of injuring competitors," plaintiffs claim in the lawsuit, according to NBC Bay Area. In their lawsuit, plaintiffs also allege that Uber is trying to drive competitors out of the market so that it will be able to charge higher prices in the long run.

What does it mean for Uber?

Spokespeople for Uber have yet to comment on the ongoing lawsuit. Plaintiffs seek to proceed as a class action lawsuit on behalf of many transportation companies that have allegedly been affected by Uber's "unfair practices" in California and that treat their drivers as employees.

Ever since it was founded in 2009, Uber has insisted many times that its drivers are independent contractors and that they appreciate the flexibility and other benefits of that status. The ongoing Diva Limousine v. Uber Technologies Inc. lawsuit could finally resolve the long-running dispute about whether the rideshare giant's classification of its drivers as independent contractors rather than employees is lawful.

Earlier this year, the California Supreme Court made the determination on which workers can be classified as independent contractors. In its landmark April 30 decision, the Supreme Court narrowed the definition of an independent contractor, stating that workers in San Diego and all across California must meet the following three standards in order to be lawfully classified as independent contractors:

  • The worker is free from the control and direction of his/her employer (hiring company).
  • The worker performs work that is outside the usual course of the employer's business.
  • The worker is customarily engaged in an independently established occupation or business.

According to a statement by Uber at the end of 2017, the rideshare company had 148,000 active drivers in California alone. Our San Diego Uber accident attorney is going to keep an eye on the developments in the lawsuit, because the ruling might seriously affect how Uber conducts its business in California and all across the U.S.

Consult with our lawyers from the Hiden, Rott & Oertle , LLP, if you are considering filing a lawsuit against Uber. Call our offices at 619-296-5884 or fill out this contact form for a free case evaluation.

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