A bunch of drivers claimed on Tuesday that Uber and Lyft are participating in anticompetitive practices by setting the costs clients pay and limiting drivers’ skill to decide on which rides they settle for with out penalty.
The drivers, supported by the advocacy group Rideshare Drivers United, made the novel authorized argument in a state lawsuit that targets the long-running debate concerning the job standing of gig economic system employees.
For years, Uber and Lyft have argued that their drivers ought to be thought-about unbiased contractors moderately than workers below labor legal guidelines, that means they’d be accountable for their very own bills and not sometimes eligible for unemployment insurance coverage or well being advantages. In alternate, the businesses argued, drivers might set their very own hours and keep extra independence than they might in the event that they have been workers.
But of their criticism, which was filed in Superior Court in San Francisco and seeks class-action standing, three drivers declare that Uber and Lyft, whereas treating them as unbiased contractors, haven’t actually given them independence and are attempting to keep away from giving drivers the advantages and protections of employment standing whereas setting restrictions on the best way they work.
“They’re making up the rules as they go along. They’re not treating me as independent, they’re not treating me as an employee,” mentioned one of many plaintiffs, Taje Gill, a Lyft and Uber driver in Orange County, Calif. “You’re somewhere in no man’s land,” he added.
In 2020, Uber and Lyft campaigned for drivers and voters to assist a poll measure in California that will lock within the unbiased contractor standing of drivers. The firms mentioned such a measure would assist drivers by giving them flexibility, and Uber additionally started permitting drivers in California to set their very own charges after the state handed a regulation requiring firms to deal with contract employees as workers. Drivers thought the brand new flexibility was an indication of what life can be like if voters accredited the poll measure, Proposition 22.
Drivers have been additionally given elevated visibility into the place passengers needed to journey earlier than they needed to settle for the experience. The poll measure handed, earlier than a decide overturned it.
Read More About the Gig Economy
The subsequent yr, the brand new choices for drivers have been rolled again. Drivers mentioned that they had misplaced the power to set their very own fares and now should meet necessities — like accepting 5 of each 10 rides — to see particulars about journeys earlier than accepting them.
The drivers mentioned now they lacked each the advantages of being an worker and these of being an unbiased contractor. “I couldn’t see this as fair and reasonable,” Mr. Gill mentioned.
The incapability to view a passenger’s vacation spot earlier than accepting the experience is especially onerous, the drivers mentioned. It typically results in unanticipated late-night journeys to faraway airports or out-of-the-way locations that aren’t price efficient.
“Millions of people choose to earn on platforms like Uber because of the unique independence and flexibility it provides,” Noah Edwardsen, an Uber spokesman, mentioned in an announcement. “This complaint misconstrues both the facts and the applicable law, and we intend to defend ourselves accordingly.”
In the lawsuit, the drivers are asking that Uber and Lyft be barred from “fixing prices for ride-share services” and “withholding fare and destination data from drivers when presenting them with rides” and be required to offer drivers “transparent per-mile, per-minute or per-trip pay” moderately than utilizing “hidden algorithms” to find out compensation.
The drivers are suing on antitrust grounds, arguing that if they’re labeled as unbiased contractors, then Uber and Lyft are interfering with an open market by limiting how they work and how a lot their passengers are charged.
“Uber and Lyft are either employers responsible to their employees under labor standards laws, or they are bound by the laws that prohibit powerful corporations from using their market power to fix prices and engage in other conduct that restrains fair competition,” the lawsuit says.
Experts mentioned the criticism can be an extended shot in federal court docket, the place judges sometimes use a “rule of reason” to weigh antitrust claims towards shopper welfare. Federal courts usually permit probably anticompetitive practices that arguably profit shoppers.
For instance, Uber and Lyft would possibly argue that the obvious restraints on competitors assist preserve down wait instances for purchasers by making certain an ample provide of drivers. The lawsuit argues that permitting drivers to set their very own costs would most certainly result in decrease fares for purchasers, as a result of Uber and Lyft preserve a considerable portion of the fares and what clients pay sometimes bears little relationship to what drivers earn.
Whatever the case, courts in California could possibly be extra sympathetic to not less than a few of the claims within the criticism, the specialists mentioned.
“If you apply some of the laws mechanically, it’s very favorable to the plaintiff in a state court and under California law specifically,” mentioned Josh P. Davis, the pinnacle of the San Francisco Bay Area workplace of the agency Berger Montague.
“You might get a judge who says: ‘This is not federal law. This is state law. And if you apply it in a straightforward way, pare back all of the gig economy complexities and look at this thing, we have a law that says you can’t do this,’” Mr. Davis mentioned.
Peter Carstensen, an emeritus regulation professor on the University of Wisconsin, mentioned he was skeptical that the drivers would get traction with their claims that Uber and Lyft have been illegally setting the worth drivers might cost.
But Mr. Carstensen mentioned a state decide would possibly rule within the plaintiffs’ favor on different so-called vertical restraints, such because the incentives that assist tie drivers to one of many platforms by, for instance, guaranteeing them not less than $1,000 in the event that they full 70 rides between Monday and Friday. A decide might conclude that these incentives largely exist to cut back competitors between Uber and Lyft, he mentioned, as a result of they make drivers much less prone to change platforms and make it more durable for a brand new gig platform to rent away drivers.
“You’re making it extremely difficult for a third party to come in,” Mr. Carstensen mentioned.
David Seligman, a lawyer for the plaintiffs, mentioned the lawsuit may benefit from rising scrutiny of anticompetitive practices.
“We think that policymakers and advocates and courts across the country are paying more attention and more closely scrutinizing the ways in which dominant companies and corporations are abusing their power in the labor market,” Mr. Seligman mentioned.
The drivers say the rollback of choices like setting their very own costs has made it tougher to earn a dwelling as a gig employee, particularly in current months as fuel costs have soared and as competitors amongst drivers has began to return to prepandemic ranges.
“It’s been increasingly more difficult to earn money,” mentioned one other plaintiff, Ben Valdez, a driver in Los Angeles. “Enough is enough. There’s only so much a person can take.”