Uber Gets Taken for a Ride

Randi Klein Hyatt
Randi Klein Hyatt

Well, not really.  But I just couldn’t resist the title.  Uber did, however, suffer another blow against it in the intensifying efforts to classify its drivers as employees.  This time, the venue was a federal court in California and the plaintiffs were two women who allege they were sexually assaulted by two of Uber’s drivers.

In Jane Doe, et al. v. Uber Technologies, Inc., No. 3:15-cv-04670 (N.D. Calif.; decided May 4, 2016), the plaintiffs alleged various causes of action against Uber, some direct and some based on respondeat superior.  Uber asked the Court to dismiss the lawsuit arguing, among other things, that the two drivers were not Uber’s employees and, even if they were, that they were not acting within the scope of their employment when committing the assaults.

The Court rejected Uber’s arguments.  Noting the general rule that an employment relationship will be found where the employer controls the means and methods of accomplishing the work, the Court noted several salient facts as alleged by plaintiffs:

  • Uber sets fare prices without driver input
  • Uber can modify charges
  • Uber retains control over customer contact information; and
  • Uber retains the right to terminate drivers at will.

While these allegations may or may not ultimately lead to a ruling that the drivers were Uber’s employees, they were enough to cause the claim to survive early dismissal.  (It bears noting that the employee/independent contractor analysis has significant application to other areas of Uber’s business, such as wage and hour law, taxation issues, etc.)

Uber also argued that, even assuming it employed the drivers, the sexual assaults were not within the scope of the driver’s duties and, accordingly, Uber could not be held liable for the drivers’ bad acts.  While at first blush the argument sounds persuasive (sexual assault is clearly not within the scope of Uber’s business), courts have routinely taken a more expansive approach to the argument.  Noting that California courts have come to different conclusions, the federal Court looked to whether the role and job for which the drivers were engaged were incidental to or had anything to do with the subsequent assault.  The Court also reasoned that this type of behavior – criminal acts – is precisely why companies like Uber perform background checks.  As with the employment issue, the Court let the case proceed on this issue.

While this case is only at its beginning stages, it highlights a trend that applies not only to Uber.  Courts and governmental agencies are taking a close look at independent contractors to determine whether they should be classified as employees.  Any such reclassification can have significant effects on a business and its owners.

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