A federal judge struck a blow to the business models of "ride-sharing" companies like Uber and Lyft by suggesting that it's not legal to treat drivers as independent contractors, and the companies may be on the hook for benefits, reimbursed expenses, and a minimum wage. Friday's comments in court came in a case against Uber brought by a group of drivers nationwide though it was narrowed just to California and it follows hints of a similar decision at a hearing the day before in a separate federal case against Lyft.
At the Uber hearing, as Bloomberg reports, U.S. District Judge Edward Chen said, "The idea that Uber is simply a software platform, I don’t find that a very persuasive argument."
An attorney for Uber is trying to get the case thrown out before it goes to trial, arguing that Uber is an "intellectual property company" and not a transportation business.
In the Lyft case, a different judge implied in a Thursday hearing that he was also leaning toward ruling that the drivers have a case about being employees.
One marker of whether drivers are treated as employees or not is whether or not they can be fired by managers. And as the Chron reports, some internal emails that had to be produced for the Uber case reveal that managers do talk in terms of terminating drivers, and there is evidence to suggest that they do control the work they do, as if they were employees.
Also, drivers are clearly integral to Uber's business, as independent contractors should not be.
An attorney for the drivers says, "They think they’ve come up with a brilliant new model by which they can shift onto workers all the expenses of having a business. California law doesn’t allow them to do that."
Neither the Uber nor Lyft cases are definitely moving forward yet, but decisions from both judges whether to let them go to trial should be coming soon. And you can bet that the top brass at both companies are extremely nervous about this.