Taxi Driver Online

The Legal Problem That Could Crash Uber


Uber faces two lawsuits. One accuses the ride-sharing behemoth of price-fixing, the other argues that its drivers are owed expenses for the mileage logged on their cars and tips.


WASHINGTON — Ride-sharing titan Uber — which is valued at about $68 billion — makes a lot of its money by skirting labor laws. And one of its top lobbying allies in the nation’s capital may have just undermined its profits.

Uber keeps its costs low by refusing to treat its drivers as employees. Under American labor law, employees are entitled to a minimum wage, overtime pay and have their expenses reimbursed. They can receive unemployment benefits if they get laid off, and have the right to unionize if they want to bargain collectively for better contract terms. The company’s drivers aren’t eligible for any of this, however, because the company maintains that its drivers are independent contractors — automotive entrepreneurs running their own businesses who have decided to link their operations with Uber.

Andrew Schmidt, a labor lawyer from Portland, Maine, has brought a new lawsuit on behalf of his client Spencer Meyer that could create a lot of trouble for Uber based on this distinction. Because if Uber’s drivers are really independent contractors like the company claims, it could be breaking a whole different set of laws: The antitrust statutes that protect consumers from corporate collusion.

“Uber has a simple but illegal business plan: to fix prices among competitors and take a cut of the profits,” the complaint reads.

If all of the company’s drivers really are independent contractors, then they aren’t allowed to secretly conspire over what to charge their customers, the lawsuit reasons. That would be price fixing, a basic antitrust law violation. Since its technology allows all of these independent contractors to set identical prices, Uber is a price fixing scheme that has to shut down and pay its customers for overcharging them, according to the suit.

Its “surge pricing” elevates the cost of a ride according to the demand for drivers. Drivers can’t opt in or out of a price surge and they don’t bid with each other for the cost of a ride. The amount is locked into the app. If a lot of people are looking to catch an Uber, the price “surges” upward. If not, it drifts back down. The price rises or falls until supply matches demand, according to Uber’s secret algorithm.

“It’s classic econ 101,” Uber CEO Travis Kalanick is fond of saying. He is worth over $6 billion, according to Forbes.

Unfortunately for Kalanick, there are econ 201, 301 and 401 classes. Some economics students even study anti-competitive behavior.

“If Uber were to become a transportation company and employ drivers, it would be free to compete with other companies using its pricing algorithm,” the complaint reads. “But Uber has refused to become a transportation company. Consequently, drivers using the app are independent firms, competing with each other for riders. They should compete on price … Instead, they have agreed to Kalanick’s scheme to fix prices among direct competitors using Uber’s pricing algorithm. Uber’s price fixing is classic anticompetitive behavior.”

Switching to an employee-driver model would, of course, be costly for the ride-sharing behemoth. On Thursday, the company agreed to pay up to $100 million to settle two class action lawsuits targeting the employment status of its drivers. The settlement allows Uber to continue classifying its drivers as independent contractors, however. It had previously attempted to bar drivers from being able to sue the company collectively, and put new wording into its driver contracts in December in another attempt to curb future drivers from taking action. Lyft, a similar, ride-sharing company, has been sued for $126 million over pay its drivers would have received had they been classified as employees.

Federal Judge Jed Rakoff, of the Southern District of New York, rejected Uber’s motion to dismiss the antitrust case this month, setting a trial date for November. Rakoff was a tough draw for Uber — a few years ago he garnered national attention when he rejected government settlements with big banks on the grounds that they were too lenient.

Uber spokesman Matt Kallman told The Huffington Post that the company disagreed with the decision to let the case proceed.

“These claims are unwarranted and have no basis in fact,” he said in a written statement emailed to HuffPost. “In just five years since its founding, Uber has increased competition, lowered prices, and improved service.”

And the top corporate lobbying coalition is undermining Uber’s argument. In December, Seattle passed an ordinance giving Uber and Lyft drivers the right to unionize. The U.S. Chamber of Commerce, America’s preeminent big-business lobby, intervened on behalf of Uber, saying that independent contractors don’t have the right to unionize. Although employees of a company are guaranteed this right, the Chamber argued, allowing independent contractors to unionize would constitute illegal price fixing.

“It’s antitrust 101 that independent actors cannot conspire with each other to set prices,” The Chamber’s chief legal officer, Lily Fu Claffee, said in a January press release.

source: http://www.huffingtonpost.com/entry/leg ... 9c59d714f6

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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin

Very interesting............If private hire drivers got themselves organised I think a lot of private hire operators may have a lot of money to pay to so called self employed drivers of private hire vehicles,if they do not hold a private hire operators license in their own right have never understood how they can be self employed,you will never have a better time to get what your due.

This law suit is in the US I can't see a similar one happening in the UK as far too many of the big players have the politicians nicely in their pockets especially ufail

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

We still have anti Collusion laws no matter how sympathetic some of our MPs maybe towards Uber they are not above the law....might work here, but that said Every Council taxi Tariff could be viewed in the same way!

Been through that one and it can be won but you need a Driver prepared to take it on and a Union whose lawyers wont fekk it up, well we had the Driver but guess what the unions Lawyers fekked it up by but not submitting in time the UNION the GMB the branch the GMBPDB and the Lawyers Thomsons.

what they are is "Workers under the direction of the company" who have virtually the same right as PAYE workers

The right to be a member of a Trade Union is enshrined in the United Nation human rights legislation and in EU law and Human Right legislation in the UK, in the USA denying workers that right centres around the debate as to whether their workers or contractors.

In the UK Unionosed drivers could with guts and courage beat UBER unfortunately they aint got either, 99% lickspittle grovellers 100% in Wales

But no theres a case running now on another thread Workers attempt to obtain their rights good on em well done Brothers and sisters

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If they win this case, then the whole private hire business model fails, except for the truly independent operator. There's rather strict anti-collusion laws in the UK and I've had this sort of discussion with Kent County Council. In my view if independents like myself chose to work for a radio circuit, they would be breaching anti-collusion and anti-competion legislation. Even when I worked with the mrs, we both had individual licences and technically could not charge the same fares for the same journeys. Other local independents wanted to get together to fix fares, but when they found it was illegal, had to give up. I know it's legal for taxis to charge the maximum shown on the meter but can charge less, so that still involves an element of competition.

With Uber, they are a huge multinational monolith who really need to be put out of business.

It isn't going to court.
http://www.reuters.com/article/us-uber- ... SKCN0XJ07H

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Grandad,

Uber is "pleased" that the deal "recognizes that drivers should remain as independent contractors, not employees," Kalanick said in the post.

I bet he is money talks and legal system favours those with the money especially big corporations as all those legal eagles and judges will one day be drawing a pension that may or may not be partly funded by investments in Ufail

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Someone else will try.

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IDFIMH

The deal is for all the drivers so that precludes a second attempt surely

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Of course his money will talk within the legal system, it's run by Rothschilds.

In that area yes, but Uber are working throughout the US, so someone else will try.

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IDFIMH

no we need someone to try in the UK

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

I agree, and it will be interesting to see how that Courier matter pans out.

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IDFIMH