Is Uber Driving its Own Workers Away?

You may have seen my series of posts on Wal-Mart back in 2014. You can click here, here and here for some of them. I spent as much time as I did with Wal-Mart because, well, they have had so much to teach employers, particularly what not to do. Wal-Mart is not the only such employer that has a lot to teach us though. More recently, Uber has stepped up to the plate. To be fair, Uber has not been quite as prolific, but then again, Wal-Mart has been around longer. Anyway, I thought that perhaps a series on Uber would be in order. This week we’ll kick off with an overview of the employment law issues Uber is facing, and, of course, we’ll see what we can learn from Uber, so read on…

(image from bestsecuritysearch.com)

In the interest of fairness, I do want to acknowledge that Uber is popular with many consumers. Uber has provided a very convenient and affordable way for people without their own cars or access to reliable public transportation to get from one place to another. Initially, it appeared that Uber had a rather new idea that seemed to be wildly successful — or at least headed in that direction.  Again, in the interest of fairness, let’s also acknowledge that businesses that grow quickly and that seem to take the market by storm often become a target by those who find it threatening. (Wal-Mart often claims that it’s a target because it is largest private employer in the U.S). With that said, however, many of the problems that Uber now faces are of its own making — even if only because of its failure to investigate potential legal issues.

Here are just a few major employment law threats that loom for Uber:

1. Discrimination, sexual harassment and retaliation claims: The most prominent allegations came from Susan Fowler, a  former Sight Reliability Engineer. Ms. Fowler went public in her blog, where she alleged sexual harassment by her manager, along with an unwillingness by H.R. and upper management to address the matter. (Apparently Ms. Fowler now also has a movie deal, and a book is in the works). Ultimately, Uber’s Board members brought in former Attorney General Eric Holder and Board Member Arianna Huffington to investigate. The 215 claims  investigated break down as follows: 54 of discrimination, 47 of sexual harassment, 33 of bullying 19 of other harassment, 13 of retaliation, 3 of physical security and 1 of wrongful termination. Uber reportedly has taken steps to ensure that such situations do not arise again in the future, but lawsuits focus on the past. That means that as long as an employee files a claim before the statute of limitations has run (and proves the allegations) s/he can still seek redress for past wrongs. Apparently, at least one former employee is trying to sue Uber, despite having previously signed an agreement to submit such disputes to binding arbitration.  It should be interesting to see how these types of claims play out in the near future.
2. Liability for its workers’ bad acts (aka negligent hiring/negligent retention): whether the drivers or other workers are employees or independent contractors (more on that in a moment) if you hire someone to do any type of work for you, and that person causes harm to someone else you may be liable-particularly if there were reasonable steps you could have taken to learn about, and maybe prevent the danger. You may recall the infamous case of the Uber driver that allegedly raped a passenger. Reasonable steps include appropriate screening, such as background checks. The passenger in fact sued Uber, and the parties settled in 2015. Now the passenger sued again, this time alleging privacy violations and defamation. It’s nice to have a business model that appears to be very simple and inexpensive, but ignoring legal risks is not a good way to keep things simple and inexpensive. This leads to the next big group of problems Uber has created for itself…
3. Worker misclassification allegations: Uber classified its drivers as independent contractors. A number of class action lawsuits are pending on the issue of whether the drivers are in reality misclassified employees. As you are probably aware, independent contractors are not entitled to minimum wage or overtime pay, or benefits, and certain protections afforded by anti-discrimination and other labor and employment laws.  These allegations generally spill over into claims for unpaid wages, including overtime pay. They can also lead to imposition of state fines and penalties, for failure to cover such workers on their workers’ compensation insurance policies. Also, negligent or other wrongful acts by the drivers would not be covered under Uber’s auto or other commercial general liability insurance. Many passengers are blissfully unaware that the drivers are not insured.
4. Organized Labor and Antitrust Issues: A battle rages in Seattle over whether for-hire drivers can vote to unionize. A Seattle ordinance allowing exactly that is currently on hold pending resolution of  a US Chamber of Commerce antitrust lawsuit, alleging that Uber fixes the prices drivers may charge. Another antitrust lawsuit is pending in New York and involves the same allegations. This practice is only OK if the drivers are employees. That brings us back to the worker classification issue. Don’t worry we’ll talk more about that in an upcoming post.

Now, just to be clear, these are just 4 categories of problems Uber is encountering. There are many more than 4 lawsuits or legal probes. Courthouse News Service states that Uber has been sued “at least 433 times this year”. This figure is based on numbers from its own database that it uses to track legal filings. According to Courthouse, the lawsuits include “claims of negligence, failure to train, exaggerating the background checks it claims to do on its drivers, many injury accidents, including an alleged death caused by an Uber driver using his mobile phone while driving, and class actions about its treatment of drivers, including failing to secure workers’ compensation insurance for them, and failing to serve disabled passengers.”

That should be a sufficient introduction for now. We’ll start getting into more specifics next week, so stay tuned!

Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.