To Avoid Regulations, Uber Describes Itself as Either, Neither and Nor

It depends on which lawsuit you read. The company changes its description of what it does depending on what best allows it to avoid regulatory scrutiny.

People sign up to become Uber drivers at the first of Uber's 'Work On Demand' recruitment events where they hope to sign 12,000 new driver-partners, in South Los Angeles on March 10, 2016. / AFP / Mark Ralston        (Photo credit should read MARK RALSTON/AFP/Getty Images)
Photo: Mark Ralston/AFP/Getty Images

Uber is a traditional employer recruiting employees. Or Uber is a non-employer facilitating the work of independent contractors. Or Uber is a technology company supplying an app to small businesses.

It depends on which lawsuit you read. The company, valued at over $62 billion, changes its description of what it does depending on what best allows it to avoid regulatory scrutiny.

In a series of cases over the past year, Uber has denied that the roughly 400,000 people who work as Uber drivers — and are paid by Uber for those services — are employees of the company. The company took that position in numerous class-action lawsuits in California, Massachusetts, and Florida.

The California Labor Commission ruled last June that an Uber driver is an employee, however, and therefore entitled to benefits under labor law like reimbursement for expenses and overtime pay. The class actions in California and Massachusetts settled for $100 million, with the company agreeing to policy changes around deactivating drivers and recognizing a “Driver’s Association” to bring complaints of drivers to the company’s management.

But a separate spate of lawsuits, the most recent released this week, accuse Uber of violating the Telephone Consumer Protection Act by text-messaging advertisements without “prior express written consent.” The text messages say things like “You’re invited to drive Uber. No schedule. No boss. Sign up now and get a $500 bonus.”

In these cases, Uber consistently claims that they are not sending ads, but offers of employment, which don’t require written consent. That would make Uber an employer seeking workers.

That argument has met with success. In one suit dismissed last July, U.S. District Court Judge Jon Tigar ruled that “Uber is primarily a transportation business that provides ride services, not a technology business,” and that their text messages were “an attempt to recruit drivers so that those potential drivers could provide services to riders.”

So Uber is an employer when trying to wriggle away from unsolicited advertising laws, but not an employer when trying to wriggle away from labor laws.

A third type of court case argues that, if Uber’s drivers are independent contractors, the company is guilty of fixing prices among competitors, as all the contractors charge the same rate for rides, based on an algorithm managed by Uber.

In this antitrust case, Uber calls itself a software company, supplying an app that drivers can use to find fares. “Uber is not a transportation company and does not employ drivers to directly provide transportation services,” Uber claimed in its motion to dismiss. That motion to dismiss was denied.

A recent study from New York University researchers found that Uber heavily monitors the activities of its drivers, setting the payment rates, performance targets, and a review process through the use of customer ratings. These represent a digital version of the typical manager/worker relationship. “The company produces what many reasonable observers would define as a managed labor force,” said researcher Alex Rosenblat, who conducted the study with Luke Stark.

Uber officials would probably agree with this — if they were trying to avoid fines for unsolicited text messages. They wouldn’t, if they were trying to avoid fines for uncompensated employees or price-fixing among contractors.

Top photo: Uber “Work On Demand” recruitment event in Los Angeles on March 10, 2016.

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