Uber Technologies, Inc., an upstart car service, is being accused of exploiting drivers, according to a lawsuit filed against the company. The suit also accuses Uber of not giving drivers all the money they receive in gratuities from riders, that the company “retains a portion of the gratuity for itself.” That alleged conduct violates the Massachusetts tips law, according to Liss-Riordan, an attorney in the case.
The suit filed Thursday in Suffolk County Superior Court in Boston accuses Uber of misclassifying its drivers as independent contractors to avoid paying them the same as employees with benefits.
“By not classifying its drivers as employees, Uber is shifting the expenses of running a business to its workers,” Liss-Riordan, said. “Making the workers pay for these business expenses saves Uber an enormous amount of money.” The case was filed on behalf of an Uber driver, Hakan Yucesory of Brookline, but is seeking class action status so the case could apply to other drivers.
Uber releases few statistics about its business: It does not, for example, disclose how many drivers are in the service. But in May Uber said is “generating 20,000 new driver jobs every month” worldwide. It now operates in 38 countries, including 77 cities in the United States, Canada, and Mexico. In one online post on the company’s website Uber boasted that its drivers can make $90,000 in New York and $74,000 in San Francisco. Liss-Riordan said those figures do not take into account the expenses the drivers incur as independent contractors that the company would otherwise foot if they were treated as employees.
Launched four years ago in San Francisco, Uber makes a smartphone app that riders use to hail a private car service. The company describes itself as a software platform that its “partners” — not drivers — use to build their own small businesses. Uber spokesman Taylor Bennett said that while the company would not comment on the lawsuit, “I can tell you that Uber will vigorously defend the rights of riders to enjoy competition and choice, and for drivers to build their own small business.”
If the case is won in Boston or California, Uber may be forced to change a key part of its business model. “If their drivers are classified as employees then that suddenly makes their business model untenable,” said Denise Cheng, a research assistant at the MIT Center for Civic Media.
Uber is perhaps the highest profile example of a company that fits into the peer economy category. If these services continue to grow, Cheng said states should consider a new hybrid employment classification for the people providing the labor. “There needs to be a third classification that eases the transition between being a freelancer and being an employee,” she said. Massachusetts has some of the most stringent employment laws in the country. Under state law, for workers not to be considered employees they must be engaged in activities that are “outside the usual course of business of the employer.”