Popular ridesharing companies are currently facing extreme criticism for an undefined classification of their employees and for providing inadequate wages. People claim that Uber and Lyft are deliberately labeling drivers as “independent contractors” instead of employees. An Independent Contractor status means Uber and Lyft to not need to reimburse drivers for expenses such as mileage and car maintenance, nor are they required to pay drivers minimum wage, unemployment, and sick pay benefits, which as employees they would legally receive.
Uber Technologies, Inc. (Uber) is an American multi-purposeful company that has become a worldwide phenomenon since it was founded in 2009. According to Uber, there are currently 900,000 Uber drivers in the United States, and it is projected that there are about 3 million drivers throughout the world. Uber has announced that there are 75 million riders worldwide, and the company has completed 6.9 billion trips in 2019. Primarily located in the United States and Canada, Lyft, Inc. is another carpooling service that is similar to Uber. With over 1.4 million drivers, Lyft continues to expand its accessibility to clients in both countries. The two establishments employ drivers to offer a variety of services, including delivering food and providing rides for transportation. In fact, a majority of Uber drivers also work for Lyft. As the businesses continue to grow, the debate over the companies’ employee policies becomes more imminent.
The major lawsuits are predominantly occurring in California, where both companies are headquartered in San Francisco. In May, a lawsuit concerning the misclassification of drivers was opened. As a result of the case, a judge has allowed Uber and Lyft to change their classification of drivers as a preliminary injunction. If the companies fail to response to this decision, the judge will prohibit the terminology of drivers as independent employees. As stated by law in California, ridesharing establishments are required to announce their drivers as official employees. Following the previous and current lawsuits, California has updated strict and specific laws for people to be independent contractors. Since then, other numerous lawsuits have surfaced. California’s Labor Commissioner declared that the businesses are being charged for alleged wage theft. Also, they have been accused of not providing certain benefits for their workers that are mandatory under state law. Under the misinterpretation of drivers as independent contractors, they were not required to provide benefits. Now that the term is being viewed incorrectly, Uber and Lyft will have to compensate for the financial losses.