Both Uber and Lyft use a freelance contractor model to hire drivers; drivers offer their cars to users and willingly transport individuals to their desired location upon request. The drivers make their own schedules and can have as many or as few shifts as they want. However, are all of the drivers receiving fair compensation?
This is the question that two different court cases in San Francisco will attempt to answer.
Lyft and Uber are both facing separate lawsuits that seek class action status in San Francisco federal court, Reuters reported. The case began when drivers from both companies contended that they were employed by the companies (not just freelance contractors), and deserved full reimbursement for the various expenses of being a driver, including gas and maintaining the vehicle.
If the courts end up ruling against Uber and Lyft, then the companies will be required to pay for a lot more, including their drivers' social security, workers' compensation and unemployment insurance.
The contractors expressed in the case that the compensation they received wasn't enough to live on, and that the external costs (which Reuters estimates to be more than $10,000) made the income difficult to live off of.
Attorney Shannon Liss-Riordan told Reuters that the ruling would only apply to anyone working in California, but once Uber is required to pay in one state, it wouldn't be surprising to see similar cases enacted in other states.
But some, including Jame Mcquivery of Forrester, think the outcomes of the Uber and Lyft cases will affect more than just Uber's out-of-state business. They expect the results of the case to affect contractor-based companies like Taskrabbit and Homejoy.
The cases begin this week. Lyft's hearing begins on Thursday, and Uber's will happen on Friday. It's uncertain how much compensation the drivers involved in the case are looking for. Uber and Lyft were unwilling to comment on the case.
