Uber classified drivers as contractors, not employees. As a result, the company avoided withholding income tax from driver earnings, and avoided paying the employer’s share of payroll taxes.
The correctness of this classification is disputed via ongoing litigation in numerous jurisdictions. On July 12, 2017, Uber drivers in North Carolina won preliminary class-action status in a case brought under the Fair Labor Standards Act.
Because Uber argues that its drivers are not employees, the company does not allow them to make workers’ compensation claims for injuries that occur in the workplace, i.e. while driving.
In a May 2017 addition, Uber began to offer an optional insurance program to drivers. Nonetheless, Uber’s policy is importantly inferior to workers’ compensation. 1) Uber’s policy comes at at an additional cost that drivers must pay, whereas workers’ compensation is automatically provided by employers to employees at no charge. 2) Uber’s optional coverage maxes out at half of a driver’s average weekly earnings, whereas many states require that workers’ compensation pay out more (two thirds of salary in California, Massachusetts, and New York). 3) Uber’s policy requires drivers to submit disputes to arbitration, whereas workers’ compensation disputes are overseen by public boards. 4) Uber’s policy covers only total disabilities that prevent a driver from working at all, whereas workers’ compensation covers partial disabilities.
A June 2017 complaint, filed by the Equal Rights Center in federal court in Washington DC, criticized Uber’s failure to include wheelchair-accessible vehicles in its standard UberX fleet, alleging that this violates the Americans with Disabilities Act. The complaint criticized Uber Access, Uber’s wheelchair-capable service, as limited to a subset of markets as well as offering inferior service with approximately double the wait time and approximately double the fare. The complaint alleged that not one vehicle in Uber’s 30,000-vehicle fleet in Washington DC is capable of transporting a passenger who uses a non-folding wheelchair.
Quartz reports surprisingly high fees from the “partner dealers” who lease cars to Uber drivers. For example, one driver was quoted $495 per week (including insurance but not repairs or maintenance), totaling $78,705 over three years, plus a $3,000 “service fee” — for a car that cost $45,292 to buy outright, new.
Another driver was asked to pay $68 per week for a service that Quartz describes as “proper licensing with the city’s taxi commission” — yet the actual fee was $68 for two years, making this a $3500+ fee per year. (Surprised by this high fee, a taxi and limousine commission spokesperson commented “wow.”)
Uber allowed partner dealers to withdraw fees directly from drivers’ payments from Uber, or from drivers’ bank accounts if their Uber earnings were insufficient.
When the city of San Francisco demanded that Uber provide it with drivers’ names and contact information so the city could demand that drivers obtain business licenses and pay applicable fees, Uber claimed that disclosures would violate drivers’ right to privacy. In a June 2017 ruling, Superior Court Judge Richard Ulmer disagreed, ruling that the city Treasurer and Tax Collector had legal authority to demand the information. He said compliance would not be unduly burdensome, and that any drivers who wished to challenge license requirements could do so on their own.
Lyft provided the data to San Fransisco without litigation.
The Federal Trade Commission flagged Uber providing drivers with financing terms inferior to what its marketing materials promised. The FTC said drivers received worse rates on average than consumers with similar credit scores would otherwise obtain. Uber further promised that its leases provided unlimited mileage, though there were actually mileage limits. Details in the FTC’s complaint.
Uber paid $20 million to settle these claims (along with claims about exaggerated annual and hourly earnings). The funds were used to provide refunds to affected drivers
The Federal Trade Commission flagged Uber exaggerating the yearly and hourly income drivers could make in certain cities. For example, Uber claimed on its site that uberX drivers’ annual median income was more than $90,000 in New York and more than $74,000 in San Francisco — but the FTC found that the actual medians were $61,000 and $53,000 respectively, and that less than 10 percent of all drivers in those cities earned the amounts Uber touted.
The FTC also alleged that Uber made false hourly earnings claims in job listings on Craigslist and elsewhere. In eighteen different cities where Uber advertised hourly earnings on Craigslist, fewer than 30% of drivers earned the promised amount. In some cities, as few as 10% of drivers earned the promised amount. Details in the FTC’s complaint.
Uber paid $20 million to settle these claims (along with claims about vehicle financing terms). The funds were used to provide refunds to affected drivers.
CEO Travis Kalanick served on Donald Trump’s economic advisory council. After intense criticism, Kalanick stepped down in February 2017, indicating that he did not intend the advisory council participation to be an endorsement of the president’s agenda but understood that it had been interpreted in that way.
The Miami Herald reports that Uber drivers have received more than 3,000 tickets and similar citations, totaling $3.2 million. One proposal would waive $1.4 million of that, though critics questioned why the fines should be reduced.
Police have also impounded at least 20 cars from Uber drivers.
Commissioner Dennis Moss said Uber “made a conscious decision to violate the rules” and should therefore pay the full penalty. Other critics noted Uber’s guidance to drivers about how to avoid getting caught by police.
Former Uber employee Samuel Spangenberg alleged that Uber routinely deleted files which were subject to litigation holds (a required legal procedure designed to preserve documents relevant to pending litigation).