Suits Against Uber, Lyft Aim to Expand Definition of "Employee" Within On-Demand Economy and Beyond

February 06, 2015

Car service giants Uber and Lyft recently appeared in a federal court in San Francisco to defend themselves against drivers claiming they are employees of the enormously popular tech start-ups, not independent contractors.  The class actions have significant implications for other popular app-based platforms, which are currently driving an extraordinary boom in on-demand employment in industries ranging from housecleaning to grocery delivery to legal services.  If the court finds that the drivers are employees, Uber and Lyft will be responsible for minimum wage, worker’s compensation, and other costs and statutory protections afforded to employees.  Moreover, such a decision would deal an incalculable blow to the on-demand economy, which allows flexible scheduling to fit worker needs and has generated new income streams at a time of stagnant wages.  The Uber and Lyft drivers argue that the companies' ability to hire and fire them based on adherence to rules governing their conduct with customers, as well as requirements that drivers accept a certain percentage of rides and pass background checks, all demonstrate an employer-employee relationship.  The companies have maintained that the drivers retain significant control over their operations, including their own schedules, where they operate, and their equipment, including cars, which the drivers supply themselves.