Lyft and larger rival Uber – both emerging ride-sharing companies based in the US – have been called in two separate lawsuits seeking class action status in San Francisco federal court, with drivers claiming they need to be treated as employees, not independent contractors.
Last week, the US judge overseeing the Lyft case contended it was “very difficult” to decide whether the drivers for the smartphone-enabled car services qualify as employees or not – though the state’s law seemed to favor them in their claim. The drivers want the companies to treat them as employees, thus being reimbursed for such expenses as gas and vehicle maintenance. If the ruling goes against any of the two companies, the implications would hit both – as they could be forced to cope with the larger costs associated with social security, workers’ compensation, and unemployment insurance. US District Judge Vince Chhabria said that traditional employment categories are “woefully outdated” when applied to companies such as Lyft or Uber.
While a hearing on the same issue – the Lyft judge did not rule from the bench last week – is also expected in the Uber lawsuit later this week in Friday, Chhabria believes that California’s legal precedents “point pretty strongly in the direction” that “people who do the kinds of things that Lyft drivers do here are employees.” Drivers claim they should eb treated as regular employees as both Uber and Lyft can hire and fire them, require them to have their background checked and also accept a certain amount of rides. The companies on the other hand rule that drivers have their own schedules, have no territory assigned and are not given any other equipment apart from a sign and an iPhone.