California Says Uber Driver is an Employee, Not an “Independent Contractor”

Yesterday, Uber appealed a California Labor Commission ruling that held an Uber driver was not an independent contractor, but an employee of Uber.  $4,152.20 in backwages is insignificant when compared to the broad implications of reclassifying Uber drivers as employees.

The ruling is in striking contrast to Uber’s long-held proclamation as a “logistics” or a “lead generating” service that simply connects independent contractors to consumers desiring those services.

A similar ruling here in Washington State could have a major impact on Uber operations here. The Washington State Supreme Court tackled the independent contractor v. employee issue recently in Anfinson v. FEDEX Ground Package System, Inc., 281 P.3d 289 (2012) in adopting the FLSA (“Fair Labor Standards Act”) “economic reality” test[1] for deciding whether an individual is an employee or an independent contractor.[2] The test largely focuses on the degree to which an employer asserts control over the worker. Should a similar ruling to California’s be adopted here, Uber would need to dramatically revise its business model.

[1] The Court referring it to also as the “economic dependence” test.

[2] See also: Bonnette, 704 F.2d at 1469-70 (Home health care workers jointly employed by social service agencies); Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748, 755-56 (9th Cir. 1979) (licensor of patented strawberries may have jointly employed strawberry growers, where it could control important growing and marketing decisions).

Uber Problems: Are Passengers Insured For Car Accidents?

This week, The San Francisco Chronicle, Forbes, and The Washington Post all reported on the confusion over insurance coverage over accidents involving popular app-based services such as UberX, Lyft and Sidecar. Insurance coverage has been a major issue for the ride sharing companies following a high profile accident in San Francisco where a small child was fatally injured by an Uber driver. Similarly this month, a Lyft passenger was fatally injured outside of Sacramento, CA.

Questions have arisen as to what extent a car accident is covered by the driver's policy v. the ride-sharing service? Does a driver or ride-sharing service cover accidents when en route to a pickup? Will a passenger be covered for accidents where the ride-sharing driver is at fault?

According to news reports, Uber has a $1 Million dollar policy, but an accident may not be covered until the driver is matched with a paying customer. This reported policy has drawn criticism following the San Francisco fatality where the Uber driver was not transporting a customer at the time of the collision.

In a traditional auto-accident, the at fault driver will be responsible for damages through his or her insurance policy. If he or she does not have coverage or has inadequate coverage, the party not at fault's uninsured (UM) or underinsured (UIM) coverage usually will apply. Ensuring potential victims of auto accidents are covered when using app-based ride sharing programs is vital to the safety of the urban areas where these services operate.

First Uber, Now Lyft: Insurance Issues

San Francisco News outlets reported yesterday of Lyft-operated vehicle who allegedly struck a pedestrian in the Nob Hill neighborhood.  The pedestrian was later taken to a hospital for a leg injury and is not believed to have suffered life-threatening injuries.

The accident comes just two weeks after a fatal car accident in San Francisco involving an Uber driver.  Ride-sharing companies such as Uber, Lyft, and Sidecar have gained increasing attention in recent weeks for public safety and adequacy of insurance coverage for accident victims.

Uber Woes…Not Just Legal

The New York Times reports this week of the recent challenges facing ride-share operator Uber. In the last few months, Uber has drawn critics from celebrities such as Salman Rushdie and Jessica Seinfeld for exorbitant pricing during peak times. New Year’s Eve 2013 also marked the tragedy of a fatal car accident with an alleged Uber-contracted driver, killing a 6-year-old girl. Uber is also being sued by its own drivers over tips drivers reportedly never received.

The article appearing in the New York Times Technology section highlights the many problems a tech startup can face in transitioning an industry-disrupting idea into reality.