A group of drivers claimed on Tuesday that Uber and Lyft engage in anti-competitive practices by setting the prices customers pay and limiting drivers’ ability to choose which trips they accept without penalty.
The drivers, supported by the law firm Rideshare Drivers United, came up with the new legal argument in a state lawsuit that addresses the long-running debate about the job status of workers in the gig economy.
For years, Uber and Lyft have argued that their drivers should be considered independent contractors instead of employees under labor law, which means they will be responsible for their own expenses and are usually not eligible for unemployment insurance or health benefits. In exchange, the companies claimed, drivers could set their own hours and maintain more independence than they could if they were employees.
However, in their lawsuit, which was filed in the Superior Court of San Francisco and filed for class action, three drivers claim that Uber and Lyft, while treating them as independent contractors, have not really given them independence and are trying to avoid giving drivers benefits and protection of employment status while imposing restrictions on the way they work.
“They make the rules eventually. “They do not treat me as independent, they do not treat me like an employee,” said one of the plaintiffs, Taje Gill, a Lift and Uber driver in Orange County, California. “You are somewhere in no man’s land,” he added.
In 2020, Uber and Lyft campaigned for drivers and voters to support a ballot initiative in California that would lock down drivers’ independent contractor status. The companies said such a move would help drivers by giving them flexibility, and Uber also began allowing California drivers to set their own prices after the state passed a law requiring companies to treat contract employees as employees. The drivers thought the new flexibility was a sign of what life would be like if the voters approved the ballot paper, Proposition 22.
The drivers also gained increased insight into where the passengers wanted to travel before they had to accept the trip. The vote passed before a judge reversed it.
Read more about Gig Economy
The following year, the new options for drivers were rolled back. Drivers said they had lost the opportunity to set their own prices and now have to meet the requirements – such as accepting five out of every 10 trips – to see details of travel before accepting them.
The drivers now said that they lacked both the benefits of being employed and those of being an independent contractor. “I did not see this as fair and reasonable,” Mr. Gill said.
The inability to see a passenger’s destination before accepting the trip is particularly burdensome, the drivers said. This sometimes leads to unexpected late trips to distant airports or secluded destinations that are not cost effective.
“Millions of people choose to earn on platforms like Uber because of the unique independence and flexibility it provides,” Nober Edwardsen, an Uber spokesman, said in a statement. “This complaint misunderstands both the facts and the applicable law, and we intend to defend ourselves accordingly.”
A spokeswoman for Lyft, Jodi Seth, said in a statement: “California voters overwhelmingly supported a vote that delivers what drivers want and cannot get through traditional employment: flexibility and independence.” She added, “Lift’s platform provides valuable opportunities for drivers in California and across the country to earn wages whenever and however they want.”
In the lawsuit, drivers are asking that Uber and Lyft be barred from “setting rates for carpooling services” and “withholding fare and destination data from drivers when presenting them with rides” and be required to give drivers “transparency per mile”, per minute or per turn salary “instead of using” hidden algorithms “to determine compensation.
The drivers are suing for antitrust, claiming that if they are classified as independent contractors, Uber and Lyft are disrupting an open market by limiting how they work and how much their passengers are charged.
“Uber and Lyft are either employers who are accountable to their employees under labor standards laws, or they are bound by the laws that prohibit powerful companies from using their market power to set prices and engage in other conduct that restricts fair competition,” it is stated in the lawsuit.
Experts said the complaint would be a long shot in a federal court, where judges typically use a “ground rule” to weigh antitrust claims against consumer welfare. Federal courts often allow potentially anti-competitive practices that undoubtedly benefit consumers.
For example, Uber and Lyft can argue that the apparent restrictions on competition help to keep customers’ waiting times down by ensuring adequate access to drivers. The lawsuit argues that letting drivers set their own prices is likely to lead to lower prices for customers, because Uber and Lyft retain a significant portion of the prices, and what customers pay is usually unrelated to what drivers earn.
Whatever the case, California courts may be more sympathetic to at least some of the allegations in the lawsuit, experts said.
“If you apply any of the laws mechanically, it’s very beneficial to the plaintiff in a state court and under California law specifically,” Josh P. Davis, head of the San Francisco Bay Area office, told Berger Montague.
“You can get a judge who says, ‘This is not federal law. This is state law. And if you use it in a simple way, everyone reduces the complexity of the gig economy and looking at this thing, we have a law that says that you can not do this, “said Mr. Davis.
Peter Carstensen, an emeritus law professor at the University of Wisconsin, said he was skeptical that drivers would get through with their claims that Uber and Lyft illegally set the price drivers could charge.
But Mr. Carstensen said a state judge can rule in the plaintiffs’ favor on other so-called vertical restraints, such as the incentives that help tie drivers to one of the platforms by, for example, guaranteeing them at least $ 1,000 if they complete 70 rides between Monday and Friday. A judge can conclude that these incentives largely exist to reduce competition between Uber and Lyft, he said, because they make drivers less likely to change platforms and make it more difficult for a new gaming platform to hire drivers.
“You make it extremely difficult for a third party to get in,” Carstensen said.
David Seligman, a lawyer for the plaintiffs, said the lawsuit could benefit from increased scrutiny of anti-competitive practices.
“We believe that decision-makers and lawyers and courts across the country are paying more attention and looking more closely at the ways dominant companies and corporations are abusing their power in the labor market,” Seligman said.
Drivers say that the return of alternatives such as setting their own prices has made it more difficult to earn a living as a concertgoer, especially in recent months as gas prices have risen and competition among drivers has begun to return to prepandemic levels.
“It’s getting harder and harder to make money,” said another plaintiff, Ben Valdez, a Los Angeles driver. “Enough is enough. There’s just so much a person can take.”