Drivers’ Lawsuit Claims Uber and Lyft Violate Antitrust Laws

A group of drivers claimed Tuesday that Uber and Lyft are engaging in anti-competitive practices by setting the prices customers pay and limiting drivers’ ability to choose which rides they accept without penalty.

The drivers, supported by the advocacy group Rideshare Drivers United, made the groundbreaking legal argument in a state lawsuit that focuses on the long-standing debate over the employment status of informal economy workers.

For years, Uber and Lyft have argued that their drivers should be considered independent contractors rather than employees under labor laws, meaning they would be responsible for their own expenses and generally not eligible for unemployment insurance or the health benefits. In return, the companies argued, drivers would be able to set their own hours and maintain more independence than if they were employees.

But in their lawsuit, which has been filed in San Francisco Superior Court and seeks class-action status, three drivers say that Uber and Lyft, while treating them as independent contractors, have not given them true independence and are trying to avoid giving them drivers the benefits and protections of employment status while placing restrictions on the way they work.

“They are making up the rules as they go along. They don’t treat me like an independent, they don’t treat me like an employee,” said one of the plaintiffs, Taje Gill, a Lyft and Uber driver in Orange County, California. “You are somewhere in no man’s land. he added he.

In 2020, Uber and Lyft campaigned for drivers and voters to support a California ballot measure that would ensure the drivers’ independent contractor status. The companies said such a move would help drivers by giving them flexibility, and so did Uber. began allowing drivers in California to set their own rates after the state passed a law force companies to treat contract workers as employees. Drivers thought the new flexibility was a sign of what life would be like if voters approved the ballot measure, Proposition 22.

Drivers were also given greater visibility into where passengers wanted to ride before having to accept the ride. The electoral measure passed, before a judge canceled it.

The following year, the new options for drivers were reversed. Drivers said they had lost the ability to set their own rates and now you must meet requirements, such as accepting five out of 10 rides, to view the details of the rides before accepting them.

The drivers said they now lacked both the benefits of being an employee and being an independent contractor. “I couldn’t see this as fair and reasonable,” said Mr Gill.

The inability to see a passenger’s destination before accepting the ride is particularly burdensome, drivers said. Sometimes it leads to unexpected overnight trips to faraway airports or out-of-the-way destinations that aren’t profitable.

“Millions of people choose to earn on platforms like Uber because of the unique independence and flexibility it provides,” Uber spokesman Noah Edwardsen said in a statement. “This complaint misrepresents both the facts and the applicable law, and we intend to defend ourselves accordingly.”

A Lyft spokeswoman, Jodi Seth, said in a statement, “Voters in California overwhelmingly supported a ballot measure that offers what drivers want and can’t get through traditional employment: flexibility and independence.” She added, “Lyft’s platform provides valuable opportunities for drivers in California and across the country to earn wages when and how they want.”

In the lawsuit, the drivers ask that Uber and Lyft be prohibited from “pricing ride-sharing services” and “withhold fare and destination data from drivers when presenting them with rides” and be required to give drivers drivers “transparent prices per mile”. , pay per minute or per trip” instead of using “hidden algorithms” to determine compensation.

The drivers are suing on antitrust grounds, arguing that if they are classified as independent contractors, then Uber and Lyft are interfering with an open market by restricting how they work and how much they charge their passengers.

“Uber and Lyft are employers responsible to their employees under labor standards laws, or are bound by laws that prohibit powerful corporations from using their market power to fix prices and engage in other conduct that restricts fair competition,” it says. the demand.

Experts said suing would be a long shot in federal court, where judges typically use a “rule of reason” to weigh antitrust claims against consumer welfare. Federal courts often allow potentially anticompetitive practices that could benefit consumers.

For example, Uber and Lyft could argue that apparent restrictions on competition help reduce customer wait times by ensuring an adequate supply of drivers. The lawsuit argues that allowing drivers to set their own prices would likely lead to lower fares for customers, because Uber and Lyft keep a substantial portion of fares, and what customers normally pay. has little relationship to what drivers earn.

Whatever the case, California courts could be more sympathetic to at least some of the claims in the lawsuit, experts said.

“If some of the laws are mechanically applied, it is very favorable to the plaintiff in state court and specifically under California law,” said Josh P. Davis, director of the firm’s San Francisco Bay Area office. Berger Montague.

“A judge might say, ‘This is not a federal law. This is state law. And if you apply it in a simple way, reduce all the complexities of the informal economy and look at this, we have a law that says you can’t do this,’” said Mr. Davis.

Peter Carstensen, a law professor emeritus at the University of Wisconsin, said he was skeptical that drivers would gain traction with his claims that Uber and Lyft were illegally setting the price drivers could charge.

But Carstensen said a state judge could rule in favor of the plaintiffs on other alleged vertical restraints, such as incentives that help tie drivers to one of the platforms, for example, by guaranteeing them at least $1,000 if they complete 70 rides between Monday and Friday. A judge may conclude that these incentives exist largely to reduce competition between Uber and Lyft, he said, because they make drivers less likely to switch platforms and make it harder for a new gig platform to hire drivers.

“They are making it extremely difficult for a third party to get in,” Carstensen said.

David Seligman, an attorney for the plaintiffs, said the lawsuit could benefit from increased scrutiny for anticompetitive practices.

“We believe that policymakers, advocates and the courts across the country are paying more attention and taking a closer look at the ways in which dominant businesses and corporations abuse their power in the labor market,” Seligman said.

Drivers say the push back from options like setting your own prices has made it harder to make a living as a temporary worker, especially in recent months as gasoline prices have skyrocketed and as competition among drivers has begun to return to pre-pandemic levels.

“It’s been getting harder and harder to make money,” said another plaintiff, Ben Valdez, a driver in Los Angeles. “Enough is enough. There is only so much that one person can take.”

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