Uber Technologies faces ongoing legal action linked to a number of issues. As a result, the company has been forced to pay millions of dollars in settlements to drivers and consumers.
In January 2017, Uber was ordered to pay $20 million to drivers after the company was accused of misclassifying them as independent contractors and paying them less than they’d promised. The court found in favor of those claiming Uber had “duped” people into working for the company based on false data about earnings. False statements were made during a two-year period beginning in 2013 of driver recruiting efforts.
According to information released by the Federal Trade Commission, Uber drivers earned much less than the company claimed, especially when working in a select number of cities. It was also determined that the company had misled drivers about how much they would need to pay to lease cars.
Uber has built its business on contracting with drivers who want to earn money conveniently, but it has been accused of misclassifying drivers to avoid paying benefits. Many also believe that earning potential has been overestimated in an attempt to lure drivers to the company. According to one statement on Uber’s website, drivers in New York City earned $90,000, but in reality it was determined rivers were earning on an average of $61,000.
Another earnings claim based on potential earnings in San Francisco, when analyzed, presented a gap of more than $20,000 between potential promised earnings and actual earnings. In 2015, Uber revised its marketing information to reflect more accurate potential incomes in at least 16 other cities.
The multi-million settlement awarded to drivers was approved by the FTC in a 2-1 vote with the dissenting voter claiming the company’s policies did not harm consumers.
Uber released a statement following the settlement that said it is working hard to make improvements in how the company runs.
Court Finds Uber Can Use Arbitration Clause to Avoid Certain Class Action
In September 2018, a three member panel found that it was inappropriate to deem drivers employees, as was determined by a previous court based on the contract drivers sign that prohibits class action lawsuits.
Note, it was not determined that drivers are not employees, but that Uber can use its arbitration clause to avoid certification of a class for its widespread labor violations.
Despite the ruling, there is still an effort underway for drivers who believe they were treated unfairly by Uber to take legal action. Thousands of drivers are involved in individual arbitration efforts – something Uber could have avoided by dealing with the claims as a class action.
Instead, the company will be dealing with numerous individual lawsuits related to misclassification claims for years to come.
Massachusetts Uber Drivers File Suit against the Company
In addition to the individual suits Uber now faces, 79 drivers in Massachusetts recently filed a lawsuit against the company alleging it “skirted federal and state employment laws” when it labeled drivers as ICs instead of employees.
The lawsuit was filed in January 2019 and rehashes many of the issues Uber is facing in cities and states across the nation.
According to the Massachusetts suit, Uber regularly fails to meet the state’s minimum wage requirements and has also failed to pay overtime compensation when workers work more than 40 hours in one week. Many Uber drivers in Massachusetts are making less than $8 an hour 0 significantly less than the state’s minimum wage of $12 an hour.
The lawsuit claims this is a denial of “fundamental rights under state and federal laws.”
According to the federal Fair Labor Standards Act and Massachusetts law, Uber drivers should be recognized as employees and provided with the rights and benefits that come with this classification.