A group of drivers alleged Tuesday that Uber and Lyft engage in anti-competitive practices by fixing the prices customers pay and limiting drivers’ ability to choose which rides they accept without penalty.
The drivers, supported by advocacy group Rideshare Drivers United, made the novel legal argument in a state lawsuit targeting the long-running debate over the employment status of gig economy workers.
For years, Uber and Lyft have argued that their drivers should be considered independent contractors and not employees under labor law, meaning they would be responsible for their own expenses and typically not eligible for unemployment insurance or sick pay. In turn, the companies argued, drivers could set their own hours and retain more independence than they could if they were employees.
But in their complaint, filed in San Francisco Superior Court seeking class-action status, three drivers allege that while Uber and Lyft treat them as independent contractors, they haven’t really given them independence and are trying to avoid to give drivers social benefits and employment status protections while restricting the way they work.
“They invent the rules over time. They don’t treat me as an independent, they don’t treat me as an employee,” said one of the plaintiffs, Taje Gill, a Lyft and Uber driver in Orange County, California. “You’re somewhere in no man’s land,” he added.
In 2020, Uber and Lyft lobbied drivers and voters to support a voting measure in California that would establish drivers’ status as independent contractors. The companies said such a measure would help drivers by giving them flexibility, and Uber also began allowing drivers in California to set their own rates after the state passed a law requiring the company to hire contract workers to be treated as employees. Drivers thought the new flexibility was a sign of what life would be like if voters approved the Proposition 22 voting measure.
Drivers also got a better view of where passengers wanted to travel before they had to accept the ride. The electoral measure passed before a judge overturned it.
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The next year the new options for drivers were rolled back. Drivers said they lost the ability to set their own fares and now have to meet requirements – like accepting five out of 10 rides – to view details on rides before accepting them.
The drivers now said they lacked both the benefits of being an employee and those of an independent contractor. “I couldn’t see that as fair and reasonable,” said Mr. Gil.
The inability to indicate a passenger’s destination before accepting the ride is particularly distressing, drivers said. This sometimes results in unplanned nightly trips to distant airports or remote destinations that are not cost effective.
“Millions of people are choosing to earn on platforms like Uber because of the unique independence and flexibility it offers,” Uber spokesman Noah Edwardsen said in a statement. “This complaint misunderstands both the facts and the applicable law, and we intend to defend ourselves accordingly.”
In the lawsuit, drivers are demanding that Uber and Lyft be prevented from “pricing ride-sharing services” and “withhold fare and destination data from drivers when they offer them rides,” and that they must give drivers “transparent per mile.” , per-minute, or fare” instead of using “hidden algorithms” to determine compensation.
The drivers are suing on antitrust grounds, arguing that if Uber and Lyft are classified as independent contractors, they are interfering in an open market by restricting how they operate and how they charge their riders.
“Uber and Lyft are either employers accountable to their employees under labor standards laws, or are bound by laws that prohibit powerful companies from using their market power to set prices and engage in other behaviors that restrict fair competition ‘ the lawsuit says.
Experts said the complaint would be a long shot in federal court, where judges typically apply a “ground rule” to weigh antitrust claims against the best interests of consumers. Federal courts often allow potentially anti-competitive practices that arguably benefit consumers.
For example, Uber and Lyft could argue that the apparent restraints on competition help reduce customer wait times by ensuring a reasonable supply of drivers. The lawsuit argues that allowing drivers to set their own prices would most likely result in lower fares for customers, given that Uber and Lyft withhold a significant portion of fares and what customers pay usually has little to do with has to do with what the drivers earn.
However, the courts in California may be more sympathetic to at least some of the allegations in the complaint, the experts said.
“If you apply some of the laws mechanically, it’s very beneficial to the plaintiff in a state court and especially under California law,” said Josh P. Davis, chief of Berger Montague’s San Francisco Bay Area office.
“You could get a judge saying, ‘That’s not federal law. That’s state law. And if you apply it in a simple way, you reduce all the complexities of the gig economy and look at this thing, 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 drivers would gain traction with their claims that Uber and Lyft illegally set the price drivers could charge.
But Mr Carstensen said a state judge could rule in the plaintiffs’ favor over other so-called vertical restrictions, such as driving between Monday and Friday. A judge could conclude that these incentives are largely intended 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 make it extremely difficult for a third party to get in,” Mr. Carstensen said.
David Seligman, an attorney for the plaintiffs, said the lawsuit could benefit from increasing scrutiny of anticompetitive practices.
“We believe policymakers, attorneys and courts across the country are paying more attention and examining the ways in which dominant companies and corporations are abusing their power in the labor market,” said Mr. Seligman.
Drivers say taking back options like setting their own prices has made it harder to make a living as gig workers, especially in recent months as gas prices have skyrocketed and competition among drivers has begun to return to pre-pandemic levels.
“It’s 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 a person can endure.”