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EMPLOYMENT STATUS OF UBER AND LYFT DRIVERS.DOCX (DO NOT DELETE) 12/12/2017 3:04 PM
HASTINGS WOMEN’S LAW JOURNAL 29
Employment Status of Uber and Lyft Drivers:
Unsettlingly Settled
Jillian Kaltner*
ABSTRACT
Uber and Lyft drivers are part of a vast pool of workers in the new
economy who exist in the legal grey area between independent contractors
and employees. Because these workers are currently classified as
independent contractors, they are without the protections and benefits that
are guaranteed to employees. Instead, these drivers are saddled with
significant work risks including: no minimum wage or overtime pay, no Title
VII protections from workplace discrimination, and no access to social
insurances like unemployment insurance and disability pay. Some scholars
have called for the creation of a third intermediary category between
employee and independent contractor to classify workers in the gig-
economy. In this ‘independent worker’ category, workers would be treated
in part as employees and in part as independent contractors. However, this
idea has been largely criticized by scholars who argue that the answer to the
uncertainties between independent contractor and employee is not to create
more blurry-lined categories.
This article will discuss the precarity of the modern independent
contractor Uber or Lyft driver. Next, I will argue that the answer to the
employment status of Uber and Lyft drivers is an equitable application of the
widely accepted Economic Realities Test. Through this test it is clear that
the drivers, and other gig-economy workers like them, are in danger of being
misclassified as independent contractors. Finally, I will conclude that while
there has been much ongoing litigation regarding the employment status of
these drivers, given supplemental litigation regarding arbitration agreements
like the ones used by Uber and Lyft, and the current political climate it is
unlikely that the drivers will see a change in their employment status anytime
soon.
*J.D. Candidate, 2018, University of California Hastings College of the Law; Executive
Editor, Hastings Women’s Law Journal; Board Member, Moot Court. Thank you to Professor
Veena Dubal for her dedication to the fight for workplace justice and her mentorship
throughout law school.
EMPLOYMENT STATUS OF UBER AND LYFT DRIVERS.DOCX (DO NOT DELETE) 12/12/2017 3:04 PM
30 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
I. INTRODUCTION
As of August 2016, there are seventy pending federal lawsuits against
Uber and even more in state courts.
1
The suits range from price fixing, to
accessibility issues, to general safety and liability claims.
2
However, the
most significant of these claims are by drivers who fervently insist that they
are being misclassified as independent contractors instead of employees. As
a result of their status as independent contractors, the drivers are being
denied employment benefits guaranteed to them by law including: minimum
wage, protection against workplace discrimination under Title VII, and
social insurances like unemployment insurance and disability pay.
3
Lyft,
Uber’s main competitor, has faced similar challenges over their drivers’
employment status.
4
Many legal scholars argue that these ride-share drivers
have a strong legal claim over the alleged misclassification, however drivers
have faced significant roadblocks to becoming employees.
Shannon Liss-Riordan has spearheaded two of the most recent class
action lawsuits over employment status against Uber and Lyft. Liss-
Riordan’s suit against Uber took over three years and contained 385,000
drivers from both Massachusetts and California who sought to be classified
as employees.
5
However despite her work, Liss-Riordan drew criticism for
agreeing to a $100- million settlement that included minor policy changes
from Uber, but did not include changing drivers’ employment status.
6
District Judge Edward M. Chen rejected the settlement, stating that if the
case did in fact go to trial and the drivers were found to be misclassified
employees, the damages could be more than $1 billion.
7
The judge in Liss-
Riordan’s lawsuit against Lyft just recently approved a $27-million
settlement which would be dispersed between a growing class of Lyft drivers
that is currently upwards of 95,000.
8
However, still the settlement does not
answer the question of employee status.
9
In response to criticism, Liss-
1. Heather Kelly, Uber’s Never-Ending Stream of Lawsuits, CNN (Aug. 11, 2016, 10:30
AM), http://money.cnn.com/2016/08/11/technology/uber-lawsuits/.
2. Id.
3. Biz Carson, This Lawyer Fought for FedEx Drivers and Strippers. Now She’s Standing
up for Uber Drivers, B
USINESS INSIDER: TECH INSIDER (May, 27, 2015, 4:26 PM), http://
www.businessinsider.com/shannon-liss-riordan-the-lawyer-behind-ubers-lawsuit-2015-5.
4. See Samantha Masunga, Judge Gives Final Approval of $27- Million Settlement in Lyft
Class-Action Lawsuit, L.A.
TIMES (Mar. 17, 2017, 9:55 AM), http://www.latimes.com/
business/la-fi-lyft-settlement-20170317-story.html.
5. Robert Mclean, Uber Will Pay Up to $100 Million to Settle Labor Suits, CNN (Apr.
22, 2016, 2:34 AM), http://money.cnn.com/2016/04/22/technology/uber-drivers-labor-
settlement/index.html?iid=H_BN_News.
6. Uber’s policy change was allowing drivers to display signs in their cars requesting tips.
Chris Isidore, Judge Rejects $100 Million Settlement Between Uber and Drivers, CNN (Aug.
19, 2016, 9:29 AM), http://money.cnn.com/2016/08/19/technology/uber-drivers-class-action-
settlement/.
7. Id.
8. Masunga, supra note 4, at 1.
9. Id.
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Riordan has argued that if these cases were to go to trial, it is unclear if juries
would respond favorably to drivers’ quest for employee status.
10
Liss-Riordan’s fear of uncertainty if these lawsuits were to proceed to a
jury trial is not unfounded. The line between employee and independent
contractor is a particularly unclear one, which has been increasingly blurred
by the prolific growth of the gig-economy.
11
Adding to the uncertainty is the
fact that there is no one test that is used to determine employee status.
12
The
most prominent current employment status tests are the Common Law
Agency test, the Economic Realities Test, and the ABC test.
13
The Common
Law Agency test focuses on the alleged employers exercise of control over
the “manner and means” of a worker’s job.
14
The ABC test looks at three
factors: “(1) whether the worker is free from direction or control, (2) whether
the worker performs the work off the premises of the business, and (3)
whether the worker is engaged in a ‘customarily’ independent trade.”
15
Finally, the Economic Realities, test which is endorsed by the U.S.
Department of Labor,
16
considers both control and the workers economic
dependence on the alleged employer.
17
Despite best intentions, Liss-Riordan’s settlements might have had an
unintended stagnating effect on the fight to become employees. As will be
discussed in the final section of this paper, given the current political climate
and other ongoing litigation regarding arbitration agreements, unfortunately
for Lyft and Uber drivers their current status as independent contractors
appears settled.
10. Masunga, supra note 4, at 1.
11. See, V. B. Dubal, Wage Slave or Entrepreneur?: Contesting the Dualism of Legal
Worker Identities, 105:101 CALIF. L. REV. 101, 103 (2017) (challenging the duality of the
worker classification in employment law).
12. For an in-depth description of when and how workers became categorized into
employees and independent contractors for the purposes of employment regulation, see Id.
Part I.
13. Dubal, supra note 11, at 108.
14. Id.
15. Id.
16. U.S
DEP’T OF LABOR, ADMINISTRATOR’S INTERPRETATION NO. 201501: THE
APPLICATION OF THE FAIR LABOR STANDARDS ACT’S “SUFFER OR PERMIT” STANDARD IN THE
IDENTIFICATION OF EMPLOYEES WHO ARE MISCLASSIFIED AS INDEPENDENT CONTRACTORS
(2015), https://www.blr.com/html_email/AI2015-1.pdf.
17. Dubal, supra note 11, at 108.
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32 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
II. DANGERS OF DRIVERS’ CURRENT EMPLOYMENT
STATUS
A. RATE FIXING AND NO MINIMUM WAGE
Lyft and Uber drivers do not receive minimum wage as guaranteed to
employees by the FLSA.
18
The two companies opt instead for a rate fixing
model, in which the company sets the rates for how much each ride will
cost.
19
Rate fixing combined with a lack of minimum wage protections is a
dangerous model that often makes wage fluctuation the norm for drivers.
20
Uber’s website touts that, in short, Uber drivers
21
can earn “as much as
[they] want.”
22
However, further investigation into the pricing model shows
a far more complicated algorithm for how much a driver can make “((base
fare + time rate + distance rate)* surge multiplier)–Uber fee + tolls and other
fees.”
23
In other words, Uber sets the base fare, the rate per time, the rate for
distance, whether or not a surge pricing is in effect, the Uber fee, and whether
other fees are applicable.
24
In fact the only part of the payment model that
Uber doesn’t control is the cost of tolls.
25
This runs directly against their
claim of drivers being in control of how much they make.
Lyft’s “How Your Pay is Calculated” webpage provides a similar pricing
model.
26
The breakdown includes a list of the items that contribute to the
overall price of a ride: base fare (what Lyft charges the passenger to start the
ride), cost per minute (what the driver earns per minute in the region where
the ride starts), and cost per mile (what driver earns per mile in the region
where the ride starts).
27
Additionally, when there is high demand for drivers,
the cost off a ride may be increased using Lyft’s Prime Time pricing.
28
Finally, taken out of the driver’s pay for each ride is a 20-to-25% commission
18. V. B. Dubal, The Drive to Precarity: A Political History of Work, Regulation, & Labor
Advocacy in San Francisco’s Taxi & Uber Economies, 38:1 B
ERKELEY J. EMP. & LAB. L. 73,
128 (2017) (discussing how unregulated competition undermined drivers’ wages).
19. Aarti Shahani, Uber Plans To Kill Surge Pricing, Though Drivers Say it Makes Job
Worth It, NPR
(May 3, 2016, 4:36 AM), http://www.npr.org/sections/alltechconsidered/
2016/05/03/476513775/uber-plans-to-kill-surge-pricing-though-drivers-say-it-makes-job-
worth-it.
20. Id.
21. UBER, https://www.uber.com (last visited Oct. 6, 2017) (Uber’s website refers to the
drivers as “drivers with Uber,” presumably to reinforce a degree of separation. I will use
“drivers with Uber” and “Uber drivers” interchangeably).
22. How Much Do Drivers With Uber Make?, U
BER, https://www.uber.com/info/how-
much-do-drivers-with-uber-make/ (last visited Mar. 8, 2017).
23. How are Fares Calculated, U
BER HELP, https://help.uber.com/h/33ed4293-383c-4d73-
a610-d171d3aa5a78 (last visited Oct. 30, 2017).
24. See id.
25. See id.
26. How Your Pay is Calculated, L
YFT, https://thehub.lyft.com/blog/how-your-pay-is-
calculated (last visited Oct. 30, 2017).
27. Id.
28. Id. Lyft’s prime time pricing and Uber’s surge pricing will be discussed at length
below.
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fee that goes directly to Lyft.
29
Similarly to Uber, Lyft sets the base fare,
cost per minute, and cost per mile, and Lyft commission fee of each ride.
Unfortunately for Uber and Lyft drivers, the amount of control that the
companies exercise over the pricing model, has lead to unsettling wage
instability. Many driver’s believe their wages have been a casualty in what
is seen as Uber and Lyft’s never-ending competition to be dubbed the least
expensive ride-share app.
30
Uber’s explanation for the fare cuts like the
significant one that occurred in 2015, was that in the winter, less people
download the app and call cars.
31
Therefore, fare cuts were needed to get
more people riding with Uber, thereby increasing the overall earning for
drivers.
32
This was not how it worked in practice. Instead, Uber drivers
complained of having to work far longer hours for less money.
33
In fact,
Uber has had to create a guarantee program so that drivers can get
reimbursements for lost wages that result from the fare cuts.
34
However,
strict limitations put on who is able to receive stipulations have made it
difficult for drivers to become a part of the program.
35
These limitations
include drivers having to accept nine out of ten rides and at least one ride an
hour.
36
Additionally, even if drivers were able to meet the stipulations, the
reimbursements failed to make up for the pay loss that resulted from the fare
cuts.
37
The final act of rate fixing done by Uber and Lyft is known as surge
pricing
38
or prime time.
39
These mechanisms allow Uber and Lyft to increase
the cost of a ride based on demand for drivers in the area.
40
Occasions that
drive up the demand for drivers in the area are things like inclement weather,
sporting events, social events, and conventions.
41
For Uber drivers,
increased fares that result from high demand are an integral part of how much
money they make.
42
According to one Uber driver, Nathan Sapp, surge
29. Id.
30. See Jack Smith IV, Uber Drivers Are Scrambling to Make Ends Meet After Latest Fare
Cuts, OBSERVER (Feb. 9, 2015, 3:22 PM), http://observer.com/2015/02/uber-drivers-are-
scrambling-to-make-ends-meet-after-latest-fare-cuts/ (article discusses Uber’s 2015 fare cuts
and their effect on drivers).
31. Id.
32. Id.
33. Id.
34. Id.
35. Id.
36. Id.
37. Id.
38. Uber’s surge pricing is calculated by multiplying the normal cost of a far by a surge
multiplier. For example, $20.00 (base fare) x 1.5 (surge multiplier) = $30.00 (gross fare). See
supra note 22, at 6.
39. Lyft’s prime time pricing is calculated by adding an extra percentage onto a base ride
amount. For example, $20.00 base fare + 50% (prime time) = $30.00 (gross fare). See L
YFT
HELP, https://help.lyft.com/hc/en-us/articles/214586017 (last visited Mar. 8, 2017).
40. Shahani, supra note 19, at 2.
41. Id.
42. Id.
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34 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
pricing is roughly a quarter of his monthly income.
43
Many drivers keep
their ear to the ground for upcoming social events, crowded bar scenes, and
sporting events so that they can be present at times they predict a surge will
occur.
44
Sapp kept in touch with local fraternities and sororities at the
Indiana University campus at Bloomington so that he would be on notice of
where and when high population events were occurring.
45
Despite driver’s reliance on surge and prime time pricing, Lyft and Uber
are constantly attempting to find ways to curtail the two mechanisms.
46
This
is in large part due to the same reasons that they rate fix their ride pricing at
such low numbers, namely because they want to be the least expensive ride-
sharing app. Additionally, customer reactions to prime time and surge
pricing have been largely negative, leading to the advent of “how to avoid
surge-pricing” online articles.
47
This has had an abysmal effect on the
drivers, who already lacked FLSA minimum wage protections.
48
With
advancements in technology, Uber is hoping to create algorithms that could
get rid of surge pricing all together.
49
More specifically, the algorithm would
be able to predict where surge pricing is likely to happen, and then redirect
enough drivers into the surge area to even out the demand for drivers.
50
This
would eliminate the need for surge or prime time pricing all together.
Unfortunately for the drivers, the success of their corporations are
largely hinged on their ability to edge out the competition by lowering prices.
Because drivers are classified as independent contractors, this corporate need
is without the typical counterbalance of FLSA minimum wage protections.
This is a recipe for wage reduction and instability for Uber and Lyft drivers.
B. NO TITLE VII PROTECTIONS
1. Ratings and Racial Bias
Title VII of the Civil Rights Act came into being in 1964 under President
Lyndon B. Johnson.
51
The act prohibited employment discrimination on the
basis of “race, color, religion, national origin, or sex.”
52
Since its advent and
implementation, Title VII has become the back bone of protection from
43. Id.
44. Id.
45. Id.
46. Shahani, supra note 19, at 2.
47. Priya Anand, How To Beat Uber’s Surge-Pricing Algorithm (And Lyft’s Too),
B
UZZFEED (Sept. 20, 2016, 4:16 PM), https://www.buzzfeed.com/priya/how-to-beat-ubers-
surge-pricing-algorithm-and-lyfts-too?utm_term=.fi8Eb2O60#.sgX8G0Z1K(article
describes strategies to avoid paying higher rates for Uber and Lyft during peak times).
48. Shahani, supra note 19, at 2.
49. Id.
50. Id.
51. Jacqueline A. Berrien, Statement on 50th Anniversary of the Civil Rights Act of 1964,
U.S.
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (July 2, 2014), https://www.eeoc.gov/
eeoc/history/cra50th/.
52. Id.
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discrimination within the workplace.
53
The power of Title VII in the work
place is only so far as the worker is classified as an employee. In other
words, independent contractors like Uber and Lyft drivers are not protected
from work place discrimination under Title VII.
54
As Noah Zatz pointed out,
this is especially troubling given how Uber and Lyft use a customer based
rating system to determine who can continue driving for them.
55
Uber and Lyft both use a similar scale of rating as quality control for
their drivers. According to Uber’s website, at the end of each ride customers
are prompted to rate their driver on a one to five scale.
56
Ratings are then
averaged based on the number of rides a driver has given.
57
If a driver’s
rating falls too low (it is not specified on the website how low), Uber will
deactivate their account thus ending the “partnership” between Uber and the
driver.
58
Uber drivers also rate their passengers.
59
Lyft’s rating system
works similarly. According to Lyft’s website, after each ride the passenger
and driver both rate each other on a five star scale.
60
If a rider rates a driver
a four or below, they will be prompted to choose feedback from a four item
menu that includes “navigation, safety, cleanliness and friendliness.”
61
Each
week, Lyft emails their drivers any feedback they have received from
passengers.
62
If a Lyft driver’s rating falls too low, the driver will be
deactivated.
63
The rating system used by these corporations means that whether a driver
will be deactivated based on low scores is in the hands of the riders that they
pick up. This creates a risk that pervasive everyday racism may effect a
driver’s ability to work.
64
Consider the example provided by Noah Zatz, in
which a “dark skinned immigrant with a Muslim- sounding name” drives a
passenger to the airport compared to a “cheerfully underemployed, native
born white recent college graduate.”
65
These two drivers’ rates and therefore
whether they would be de-activated as a driver could very likely be effected
by their race, color, religion, national origin, or sex. Because their drivers
53. Id.
54. Carson, supra note 3, at 2.
55. Noah Zatz, Beyond Misclassification: Gig Economy Discrimination Outside of
Employment Law, O
N LABOR, WORKERS, UNIONS AND POLITICS (Jan. 19, 2016), https://on
labororg/2016/01/19/beyond-misclassification-gig-economy-discrimination-outside-employ
ment-law/.
56. Star Ratings, U
BER, https://www.uber.com/info/driver-ratings/, (last visited Oct. 30,
2017).
57. Id.
58. Id.
59. Id.
60. Driver and Passenger Ratings, L
YFT HELP, https://help.lyft.com/hc/en-us/arti
cles/213586008-Driver-and-Passenger-Ratings, (last visited Oct. 30, 2017).
61. Id.
62. Id.
63. Id.
64. Zatz, supra note 55, at 1.
65. Id.
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36 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
have no Title VII protection, they are unable to file suit to rectify this
shortcoming. On the other hand, if a normal taxi company kept white drivers
on board and fired Middle Eastern ones because their passengers were more
comfortable with white people, they would likely be universally condemned
and forced to reckon with a substantial Title VII lawsuit.
Uber and Lyft drivers would likely be limited in the types of claims they
could file if they were granted employee status.
66
This is because it would
likely be impossible for drivers to prove discriminatory intent on behalf of
Uber and Lyft.
67
However, they would likely be able to bring a plausible
disparate impact case. Disparate impact cases require a facially neutral
policy that has a disparate impact on a protected class.
68
Here, the facially
neutral policy would be Uber and Lyft’s rating systems. The disparate
impact would be that people with protected class status were receiving lower
rates because of their protected traits (race, color, religion, national origin,
sex) and they were being terminated because of this. Supreme Court
jurisprudence, including the holding of Arizona Governing Committee
69
has
already indicated that discrimination that is shopped out by an employer to a
third party still violates Title VII.
70
Additionally, other courts have routinely
directed employers to take affirmative action “to monitor, prevent and
correct sex- and race-based harassment of workers by customers.”
71
In
applying this jurisprudence to Uber and Lyft, it is possible that drivers would
have legal claims that would be tenable enough to bring to court.
Regardless of the success of driver’s Title VII claims in court, the mere
accessibility to the statute could serve to vastly improve the experience of
drivers. Uber and Lyft are companies that are grounded in instantly
accessible technology.
72
Both of these companies have a “voracious appetite
for data gathering and analysis[.]”
73
It would be possible for the platforms
to take steps to screen out racial biases within their rating system.
74
For
example, if a Lyft rider scores a driver a rating of 4 or below they are
prompted to give criticism as reasoning for their rating.
75
Similarly, Uber
prompts riders to give ratings with the option to provide textualized
feedback.
76
Thus it would be very possible to screen out and adjust for
66. Id.
67. Zatz, supra note 55, at 1.
68. See 42 U.S.C. §2000e-2(k) (LEXIS through Pub. L. No. 115-71).
69. Ariz. Governing Comm. For Tax Deferred Annuity & Deferred Comp. Plans v. Norris,
462 U.S. 1073 (1983). Held that an employer who paid employees lump sum without regard
to sex, but then directed the employees to convert the sum into an annuity via an outside
vendor who discriminated based on sex violated Title VII.
70. Zatz, supra note 55, at 2.
71. Id.
72. Id.
73. Id.
74. Id.
75. See Driver and Passenger Ratings, supra note 60, at 3.
76. See Star Ratings, supra note 56, at 5.
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various types of bias based on low ratings and textualized commentary, as
well as to screen out customers with a habit of biased based rankings.
77
2. Problems for Women Drivers
The ridesharing economy has faced significant difficulty in getting
women
78
to join their driving fleets. Only 14%
79
of U.S. Uber drivers are
females.
80
Lyft has a considerably higher, but still concerning 30% female
drivers.
81
This is generally on par with the percentage of female in the U.S.
Taxi/ Chauffer industry which ranges around 12.7%.
82
However, this is an
issue for Uber and Lyft, who tout themselves as modern large scale job
creators, despite the fact that their workers are disproportionately male.
83
There are many reasons why women have declined to join the Uber and
Lyft workforce, however generally the most significant is safety. There are
countless examples of women drivers who have been harassed/assaulted
physically or sexually by male passengers.
84
These experiences include
sexual propositions, grabbing driver’s faces, thighs and breasts, and non-
sexual physical assaults.
85
These types of situations are especially dangerous
because they happen in the close quarters of a moving car.
86
The risks are
compounded by what some drivers argue is a failure of the apps safety
features.
87
For example, a female driver in Atlanta who reached out to the company
after she was sexually assaulted, claimed Uber did not remove the passenger
or respond to her via email for over a week later and until a reporter reached
out to Uber about the incident.
88
Another female driver in Arizona who was
scared by a passenger who got into her car while strung out on LSD, claimed
she was not able to block the passenger, and received a request to pick the
same passenger up again.
89
Beyond the safety concerns, there are practical limitations that effect
77. Zatz, supra note 55, at 3.
78. For the purposes of this section, the term “women” will be used in reference to
problems facing both sex-based and self-identifying women driving for Uber and Lyft. The
term “female” will be used only in reference to the statistical data.
79. Number is based off of January 22, 2015, study conducted by Uber. Jonathan Hall &
Alan Krueger, An Analysis of the Labor Market for Uber’s Driver- Partners in the United
States, IRS
WORKING PAPERS, (Jan. 22, 2015).
80. Ellen Huet, Why Aren’t There More Female Uber And Lyft Drivers?, F
ORBES (Apr. 9,
2015, 11:00 AM), https://www.forbes.com/sites/ellenhuet/2015/04/09/female-uber-lyft-drive
rs/#3ccb8b23a28e.
81. Id.
82. Id.
83. Id.
84. Id.
85. Id.
86. Id.
87. Id.
88. Id.
89. Id.
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38 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
female driver’s ability to prosper driving for the company.
90
For example,
both Uber and Lyft provide special bonuses for late-night drivers.
91
In order
to receive the pay out, the drivers have to accept 90% of the ride requests.
92
Similar restrictions were placed on Uber’s 2015 guarantee program that
provided reimbursements for lost wages that resulted from fare cuts.
93
These
policies are hostile to female drivers who tend to avoid night shifts for fear
of their physical safety.
94
Furthermore, women drivers who are on the road
late at night are pressured into accepting fares even if they seem sketchy in
order to meet the bonus requirements.
95
Finally, Uber
96
and Lyft’s
97
lost-
and- found policy allow riders to contact their drivers directly regarding a
lost item. This feature has been used by passengers to harass female drivers
even after the ride is over.
98
Uber has recognized its problem with recruiting female drivers and has
tried to draw more in, however not without facing significant pushback.
99
In
March 2015, Uber announced that it would be partnering with the UN
Women in an attempt to create one million new jobs for women by the year
2020.
100
However, this goal rejected by union groups who asserted “we fail
to see how a million precarious informal jobs could contribute to women’s
economic empowerment.”
101
As a result, shortly after Uber’s
announcement, UN Women formally announced that they would not be
collaborating with Uber.
102
Uber has since said that they are still committed
to the goal of one million jobs for women and more generally economic
opportunity for women globally.
103
Uber has a major problem with women in the workforce, and the root of
the problems can largely be tied back to independent contractor status. First
and foremost, women are faced with the perception of physical risk from
passengers and a lack of regulated ways to combat these threats.
104
Uber and
90. Id.
91. Id.
92. Huet, supra note 80.
93. Jack Smith IV, supra note 30. In order to qualify for the reimbursements, drivers had
to accept nine out of ten rides and at least one ride per hour.
94. Jack Smith IV, supra note 30.
95. Id.
96. Contact My Driver About A Lost Item,
UBER, https://help.uber.com/h/53539bde-f6f4-
4909-85de-fa0b99f82be0 (last visited Oct. 30, 2017).
97. Lost & Found, L
YFT, https://help.lyft.com/hc/en-us/articles/213583958-Lost-Found
(last visited Oct. 30, 2017)
98. Huet, supra note 80.
99. Ellen Huet, UN Women Backs Away From Uber Partnership A Week After
Announcement, F
ORBES (Mar. 20, 2015), https://www.forbes.com/sites/ellenhuet/2015/03/
20/un-women-backs-away-from-uber-partnership/#6f3b7d32f047.
100. Id.
101. UN Women + Uber = A Vision for Precarious Work, P
UBLIC SERVICES INTERNATIONAL
(March 12, 2015), http://www.world-psi.org/en/un-women-uber-vision-precarious-work.
102. Huet, supra note 99.
103. Id.
104. Id.
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Lyft’s disjointed reporting and rating systems are not enough to guarantee
safety or protection for female drivers. Additionally, female drivers are
scarcely able to comply with the bonus programs that Uber and Lyft provide
for drivers who are willing to drive at night and accept 90% of rides no matter
how unnerving the circumstances.
105
Driving at night and accepting high
rates of passengers is a luxury that female drivers who are worried about
their physical safety are not able to afford.
106
Nevertheless, this is a risk that
many female drivers, who are not guaranteed minimum wage have to take in
order to make ends meet.
107
It is unclear what legal action women drivers would be able to take if
they were considered employees and granted Title VII protections.
However, it is a safe wager that Uber and Lyft, corporations who pride
themselves on modernity, would be doing a lot more to enjoin women into
their workforce and protect their safety and dignity on the job. This would
be beneficial not only for the drivers, but also Uber and Lyft who have seen
many women based competitors crop up as a reaction to their women
problems.
108
C. LACK OF SOCIAL INSURANCES
In general, employers have to contribute to a program called
Unemployment Insurance,
109
which provides benefits to unemployed former
employees who have been laid off.
110
There are several eligibility
requirements for who can claim unemployment insurance, including: the
person must be physically able and available to work, willing to immediately
accept work, and actively looking for work.
111
Arguably one of the most
important eligibility requirements, especially as applied to Uber and Lyft, is
that the employee is fired, rather than quitting by their own volition.
112
There
is only one exception for the quitting preclusion, and that is if there was
“good cause for leaving the employment
AND the individual made all
reasonable attempts to keep their job” (emphasis original).
113
Individuals
105. Huet, supra note 80.
106. Id.
107. Huet, supra note 80.
108. Id.
109. Unemployment insurance has many regulations and intricacies regarding how much
employers have to pay, where they pay the amount to, and the validity of various
unemployment insurance claims. Uber and Lyft drivers are independent contractors and
therefore unable to receive unemployment insurance. As a result, for the purpose of this paper
unemployment insurance will only be discussed in a broad terms.
110. Kathleen Pender, The Real Differences Between Contractors and Employees, S.
F.
CHRON. (Sept. 18, 2015), http://www.sfchronicle.com/business/networth/article/The-real-
differences-between-contractors-and-6514962.php.
111. Meeting Eligibility Requirements: Filing a UI Claim, S
TATE OF CALIFORNIA
EMPLOYMENT DEVELOPMENT DEPARTMENT (last visited Oct. 30, 2017), http://www.edd.ca.
gov/unemployment/Eligibility.htm.
112. Id.
113. Id.
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40 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
who receive unemployment insurance can receive a minimum weekly
benefit amount of $40.00 and a maximum amount of $450.00.
114
Uber and Lyft’s benefit from avoiding unemployment insurance is two-
fold. First, because their drivers are independent contractors, Uber and Lyft
do not have to pay into state or federal unemployment insurance funds.
115
This is especially significant given that unemployment insurance tax rates
will often increase based on the number of employees who have filed a claim.
The second benefit Uber and Lyft get from not being beholden to
unemployment insurance is that they are able to continue with their arbitrary
means of rating as the basis for deactivating drivers. When drivers are
deactivated without notice, it can often leave them stranded without any
source of income or the social safety nets that are provided to their employee
analogs.
116
The commonness of this occurrence is deeply troubling. Uber’s
website as updated in April of 2016 lists out several broad ways a driver can
be deactivated.
117
These ways include but are not limited to: quality, star
ratings, cancellation rates, acceptance rates, safety, drugs or alcohol use
while driving, compliance with the law, unacceptable activities, fraud,
inaccurate personal information, and discrimination.
118
While Uber’s
website touts that it recognizes the importance of clear deactivation
policies,
119
the categories listed on the websites are extremely broad.
Even worse, in practice these deactivation policies have been applied
with little clarity to drivers. For example, a driver was deactivated for
“making hateful statements” against Uber.
120
Refusing to allow a service
animal in your car is also grounds for deactivation.
121
Other grounds include
having someone else riding along in your car, cancelling a ride because the
distance is too short, giving away free rides to family and friends, averaging
114. Id.
115. See U
NDERSTANDING EMPLOYMENT TAXES, https://www.irs.gov/businesses/small-
businesses-self-employed/understanding-employment-taxes (last visited Oct. 30, 2017).
116. Ellen Huet, How Uber’s Shady Firing Policy Could Backfire on The Company, F
ORBES
(Oct. 30, 2014), https://www.forbes.com/sites/ellenhuet/2014/10/30/uber-driver-firing-poli
cy/#38ec22ae1527.
117. Uber Community Guidelines,
UBER, https://www.uber.com/legal/community-guide
lines/us-en/ (last visited Oct. 30, 2017).
118. Id.
119. Id.
120. Avery Hartmans, 10 Things That Can Get Your Uber Driver Kicked off the App,
B
USINESS INSIDER (Aug, 4, 2016), http://www.businessinsider.com/10-things-that-get-uber-
drivers-deactivated-2016-8/#10-refusing-to-allow-service-animals-in-the-car-10.
Christopher Ortiz was deactivated from Uber in October 2014 for tweeting “Driving for Uber,
not much safer than driving a taxi.” Uber has stated that the deactivation was a mistake made
by local team. See Ellen Huet, Uber Deactivated A Driver for Tweeting a Negative Story
About Uber, Forbes (Oct. 16, 2014, 7:31 PM), https://www.forbes.com/sites/ellen
huet/2014/10/16/uber-driver-deactivated-over-tweet/#2c6a289f6a4c. However, since then
other drivers have alleged that they have been suspiciously deactivated after criticizing Uber
in public online forums. Ellen Huet, How Uber’s Shady Firing Policy Could Backfire on The
Company, F
ORBES (Oct. 30, 2014), https://www.forbes.com/sites/ellenhuet/2014/10/30/uber-
driver-firing-policy/#38ec22ae1527.
121. Id.
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lower than a 4.6 star rating, and promoting a competitor.
122
Many drivers
have complained that the quality control reasons for deactivation, such as
rating below a 4.6 leave the drivers at whim of highly subjective passenger
ratings.
123
The risk of deactivation for these seemingly mundane behaviors is only
exacerbated by the fact that Uber drivers receive no training by Uber before
they begin driving.
124
It would be difficult for an independent contractor
driver to know that refusing to allow a service animal their vehicle, is
grounds for immediate dismissal. Similarly, an act as innocent as giving
family or friends rides that you do not charge for, also seems to be an activity
that an independent contractor should be able to without being deactivated.
Nevertheless, without clear policy or training, many Uber and Lyft drivers
have been left to piece together what will get them deactivated.
125
Because of Uber and Lyft’s deactivation policies, the two companies are
a hotbed of unemployment insurance claims. They have a habit of
terminating workers without good cause, stranding them without any source
of income. Nevertheless, because of independent contractor status, Uber and
Lyft are able to continue their practice without out any repercussions.
III. PROPOSED ALTERNATIVES TO GRANTING EMPLOYEE
STATUS
A. INDEPENDENT WORKER
Some have argued that the solution to aforementioned problems is not
giving drivers employee status, but rather by implementing a “third”
category between employee and independent contractor, known as an
“independent worker.”
126
This category is a sort of hybrid that combines
“arms-length independent business relationships [. . .] with some elements
of the traditional employee-employer relationship.”
127
More specifically,
Krueger and Harris advocate for the creation
128
of a legal category of workers
who would have the freedom to organize and collectively bargain, civil rights
protections, and tax withholding and employer contributions for payroll
122. Hartmans, supra note 120.
123. See, Huet supra note 120.
124. Hartmans, supra note 120.
125. Huet, supra note 120.
126. Seth D. Harris & Alan B. Krueger, A Proposal for Modernizing Labor Laws for
Twenty-First-Century Work: The “Independent Worker,” T
HE HAMILTON PROJECT, Dec.
2015,
at 1.
127. Id. (abstract).
128. Id. Krueger and Harris discuss the creation of the “independent worker” category as if
it is a new idea. However, intermediary categories that blend employer and independent
contractor elements have existed throughout the world for several decades. Prominent
countries that have used this category with varying degrees of success include Canada, Italy,
and Spain, Germany and Japan. See, Miriam A. Cherry & Antonio Aliosi, Dependent
Contractors’ in the Gig Economy: A Comparative Approach, S
T. LOUIS U. SCH. OF LAW
LEGAL RESEARCH PAPER SERIES, Oct. 22, 2016, at 1,1.
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42 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
taxes.
129
However, independent workers would not receive minimum wage,
overtime pay, or healthcare eligibility.
130
Harris and Krueger also argue that
in order to ensure its accuracy and effectiveness, the “independent worker”
category should be created by Congress instead of through the courts.
131
The
“independent worker” category idea is set forth specifically with Uber and
Lyft drivers in mind.
132
The creation of this category fails in many key aspects. First, it fails to
acknowledge the risk that in creating a third category, a greater opportunity
is created for employers who do not want the burden of having to provide
their employees with all of the rights guaranteed to them by law, to move
employees into the “independent worker” category. Harris and Krueger
acknowledge that under the current system, some employers attempt to
reorganize so that they can classify their employees as independent
contractors and avoid providing benefits.
133
However they fail to
acknowledge how the creation of a third intermediate category would solve
this problem. On the contrary, Miriam A Cherry and Antonio Aliosi have
argued that the creation of a third category could lead to increased downward
misclassification in which businesses would begin shuffling more employees
into the “independent worker” category.
134
This is exactly what happened
when Italy created a third category of workers in 1973.
135
Within a decade,
Italy saw an erosion of employment protections for jobs that were
traditionally always classified as employer-employee relationships.
136
Given
that Krueger and Harris admit is a penchant for some American employers
to misclassify their employees as independent contractors, they fail to
address how creating an intermediary category wouldn’t lead to increased
issues of misclassification.
The second reason that the “independent worker” category fails is
because it is based on the hardline position that it is impossible for Uber and
Lyft to monitor how many hours a driver works. Harris and Krueger use this
faulty premise as grounds to deny “independent workers” FLSA protections
like minimum wage and overtime pay, as well as access to social
insurances.
137
On the contrary, Uber and Lyft are quite apt at data
129. Harris & Krueger, supra note 126 at 2. I will not be discussing tax withholding and
employer contribution for payroll taxes as they are outside of the focus of this note.
130. Id. at 13.
131. Id. at 15.
132. Id. at 5. Harris and Krueger state that Uber and Lyft drivers are the archetypal example
of an “independent worker” much of the article addresses drivers.
133. Harris & Krueger, supra note 126, at 7.
134. Miriam A. Cherry & Antonio Aliosi, Dependent Contractors’ in the Gig Economy: A
Comparative Approach, S
T. LOUIS U. SCH. OF LAW LEGAL RESEARCH PAPER SERIES, Oct. 22,
2016, at 1, 3.
135. Id. at 19.
136. Id.
137. See Harris & Krueger, supra note 126, at 13.
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collection.
138
In fact, both Uber and Lyft have said in public statements that
they track their driver’s work hours.
139
Thus, the idea that the companies are
unable to track work hours is largely unfounded.
Harris and Krueger make a secondary claim that it would be impossible
to know if drivers with their app on were actually working or engaging in
“personal tasks.”
140
However, again, this claim is not true. Once the app is
turned on, Uber and Lyft drivers receive requests for rides,
141
if they deny
those request to do “personal tasks” Uber and Lyft would be notified and the
driver could be reprimanded. It is already well documented as both Uber
and Lyft’s policy that they track ride acceptance rates, and if a driver does
not consistently accept a high percentage of rides, their apps will be
deactivated.
142
Furthermore, Uber and Lyft already track a driver’s
geographical location, when a passenger is picked up, and how long each
ride is in order to calculate ride fares.
143
Thus it is already well within the
power of Uber and Lyft to accurately track the number of hours a driver
works so that driver could be granted minimum wage, overtime pay, and
social insurances.
The third reason that the creation of the “independent worker” category
fails is because it fails to provide any solutions for what is the basis of
precarious work for Uber and Lyft drivers. More specifically, it grants
drivers the right to unionize and not be discriminated against, while denying
vital benefits such as minimum wage, overtime pay and social insurances.
The precarity of Uber and Lyft drivers is not simply in the fact that they can
not unionize. In fact, as of 2016 only 10.7% of workers in America were
members of unions.
144
Granting the right to not be discriminated against in
their employment is important, however it largely pales in comparison to
minimum wage, overtime pay and social insurances. To support the
implementation of Harris and Krueger’s independent worker category would
be to resign Uber and Lyft drivers to still precarious second class pseudo-
138. See Zatz, supra note 55.
139. Ross Eisenrey & Lawrence Mishel, Uber Business Model Does Not Justify a New
‘Independent Worker’ Category, ECONOMIC POLICY INSTITUTE (Mar. 17, 2016) http://www.
epi.org/publication/uber-business-model-does-not-justify-a-new-independent-worker-cate
gory/. Uber’s chief advisor and board member, David Plouffe noted the average number of
hours a week Uber Drivers drive. In Lyft’s January 2016 press release regarding their recent
court settlement which confirmed they were also able to track weekly driver hours.
140. See, Harris & Krueger supra note 126, at 13.
141. Eisenrey & Mishel, supra note 139. When an Uber or Lyft driver’s app is on, they are
engaged with the app in a very real sense. They are notified of rides in the area which they
must timely accept or deny.
142. See Uber Community Guidelines,
UBER, https://www.uber.com/legal/community-
guidelines/us-en/ (last visited Oct. 30, 2017); Acceptance Rate,
LYFT, https://help.lyft.com/
hc/en-us/articles/214218167-Acceptance-Rate (last visited Oct. 30, 2017).
143. See How Are Fares Calculated supra note 23; see How Your Pay is Calculated
supra
note 26.
144. U.S.
DEP’T OF LABOR, BUREAU OF LABOR STATISTICS, UNION MEMBER SUMMARY,
USDL-17-0107, (Jan. 26, 2017).
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44 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
employment with little more than the right to unionize. This is not a solution
to the problem at hand, but rather a distraction that’s greatest achievement
would be appeasing the growing outcry regarding worker misclassification.
B.
PORTABLE BENEFITS
An equally ineffectual solution are “portable benefits,” that have been
supported by groups like the Freelancers Union.
145
In May 2016, the
Freelancers agreed to consult with Uber to create “portable benefits” that
individual drivers would be able to buy into.
146
Essentially what it meant
was Uber and Lyft drivers would remain independent contractors, but would
be able to buy protections afforded to normal employees like unemployment
insurance and workers compensation plans.
147
In other words, these drivers,
who are not being paid minimum wage, who have to pay the costs of smart
phones and phone plans, hybrid car insurance policies,
148
wear and tear on
their vehicles, and gas would now have to buy their way into employment
benefits.
149
While the goal of the Freelancers Union in providing portable
benefits is admirable, as applied to Uber and Lyft drivers it is unsatisfactory
to continue to classify them as independent contractors with only the option
to buy their way into basic employment rights.
IV. SOLUTION: ECONOMIC REALITIES TEST
The Economic Realities test, as endorsed by the U.S. Department of
Labor should be used to determine whether Uber and Lyft drivers are
employees or independent contractors. Prior to the courts and the
Department of Labor’s embrace of the Economic Realities Test, the
Common Law Right to Control test was used to determine employment
status.
150
However, in drafting the Fair Labor and Standards Act, Congress
rejected the Common Law Control test, instead defining “employ” broadly
145. The Freelancers Union is a nonprofit organization that aims to educate, advocate on
behalf of, and serve the needs of independent contractors. The organization was founded in
in 2003 by Sara Horowitz and currently has more than 350,000 members. FREELANCERS
UNION: ABOUT SARA HOROWITZ, https://www.freelancersunion.org/about/sara-horowitz/,
(last visited Oct. 30, 2017).
Freelancers Union is not an officially recognized union under the NLRA, but rather an
education and advocacy group. Dubal, supra note 11, at 133 (footnote).
146. Dubal, supra note 11, at 133.
147. Id.
148. When a vehicle is being used for purposes beyond personal use, like Uber or Lyft
driving, personal insurance policies will not cover the costs if an accident occurs. Thus if
Uber and Lyft drivers want to be covered in case of an accident, they need to purchase hybrid
commercial and personal insurance policies. The cost of these policies vary, but they are
noticeably more expensive than normal insurance policies. Rideshare Insurance for Drivers:
Where to Buy, What it Covers, N
ERDWALLET (Mar. 21, 2017), https://www.nerdwallet.com/
blog/insurance/best-ridesharing-insurance/.
149. See, Dubal, supra note 11 at 133.
150. U.S
DEP’T OF LABOR, supra note 16, at 1.
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as “to suffer or permit work.”
151
As noted by the Department of Labor, the
Economic Realities Test and its reliance on both control factors and worker
economic reliance accurately encapsulates the definition of “to suffer or
permit work.”
152
In other words, the Department noted that a worker who is
“economically dependent” on an employer is one who has “suffered or
permitted work,” thus Congress and the Economic Reality test’s definition
of “employ” squarely align.
153
Not only is the Economic Realities appropriate because of its definitional
overlap with congress’s FLSA, but it also aligns in terms of broad scope. The
“suffer or permit work” definition as set forth by Congress was specifically
designed to “ensure as broad of a scope” of coverage as possible.
154
The
Supreme Court has also consistently acknowledged and upheld congress’s
purposefully broad standards;
See Rosenwasser, 323 U.S. at 362-63 (“A broader or more
comprehensive coverage of employees . . . would be difficult to
frame.”); Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326
(1992) (“employ” is defined with “striking breadth”). The Supreme
Court “has consistently construed the Act ‘liberally to apply to the
furthest reaches consistent with congressional direction,’
recognizing that broad coverage is essential to accomplish the
[Act’s] goal . . . .” Tony & Susan Alamo Found. v. Sec’y of Labor,
471 U.S. 290, 296 (1985) (quoting Mitchell v. Lublin, McGaughy &
Assocs., 358 U.S. 207, 211 (1959)) (internal citation omitted).
155
Thus the Economic Realities test over laps in both the definition of to
“suffer or permit work” and the statutes purposeful broadness. Because of
the aforementioned, and in accordance with the Department of Labor’s
recommendations, the Economic Realities test is the appropriate test to apply
in determining whether Uber and Lyft drivers are independent contractors or
employees.
The economic realities test typically consists of six interrelated factors,
none of which are singularly determinative.
156
They include:
(A) the extent to which the work performed is an integral part of the
employer’s business; (B) the worker’s opportunity for profit or loss
depending on his or her managerial skill; (C) the extent of the
relative investments of the employer and the worker; (D) whether
the work performed requires special skills and initiative; (E) the
permanency of the relationship; and (F) the degree of control
151. Id. at 1–2.
152. U.S.
DEP’T OF LABOR, supra note 16, at 2.
153. See id.
154. U.S.
DEP’T OF LABOR, supra note 16, at 3.
155. Id. at 3.
156. Id. at 3.
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46 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
exercised or retained by the employer.
157
At the heart of the Economic Realities test is whether the worker is
economically dependent on an employer, or whether the worker is within the
narrow subset of workers who are truly in businesses for themselves.
158
In
applying the Economic Realities test, it is clear that Uber and Lyft drivers
should be considered employees.
A) The extent to which the work performed is an integral part of
the employer’s business
Uber describes itself as an app that was developed so that people could
request cars whenever they want.
159
Lyft similarly describes itself as an app
that “matches drivers with passengers who request rides.”
160
However, it
would be remiss to pretend that driving cars for Uber or Lyft was not an
integral part of a platform that provides rides to passengers. The Department
of Labor’s guidelines further provide that work can be integral even if it is
done by “hundreds or thousands of workers.”
161
As a point of comparison,
the Department of Labor makes the distinction between carpenter and a
software developer who work with a construction company. A carpenter
who works for a construction company would obliviously be an integral part
of the employers business of building houses.
162
A software developer who
created software to help the construction company keep track of scheduling,
supplies, and material orders would not be doing work that was an integral
part of that employers business.
163
Other lower courts have agreed, holding
that cake decorators performed integral work at a custom order bakeshop,
164
and picking pickles
165
is an integral part of the pickle business.
166
Despite
their claims of being a technology company, Uber and Lyft simply would
not be able to provide the service of driving others, without the actual drivers.
Thus, the driving performed by Uber and Lyft drivers is an integral part of
the companies’ businesses.
157. Id. at 4.
158. U.S.
DEP’T OF LABOR, supra note 16, at 4.
159. Our Trip History,
UBER, https://www.uber.com/our-story/ (last visited Oct. 30, 2017).
160. What is Lyft, L
YFT, https://www.lyft.com/drive-with-lyft (last visited Oct. 30, 2017).
161. U.S.
DEP’T OF LABOR, supra note 16, at 6.
162. Id. at 7.
163. Id.
164. Dole v. Snell, 875 F.2d 802, 811 (10th Cir. 1989) (holding that cake decorators who
worked at a custom cake decorating shop were performing an integral part of the employer’s
business).
165. Secretary of Labor v. Lauritzen, 835 F.2d 1529, 1537–38 (7th Cir. 1987) (“[I]t does
not take much of a record to demonstrate that picking the pickles is a necessary and integral
part of the pickle business”).
166. U.S.
DEP’T OF LABOR, supra note 16, at 6.
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B) The worker’s opportunity for profit or loss based on depending
on his or her managerial skill
This factor does not focus on the worker’s ability to work more or less
hours on their own volition, but rather whether the worker exercises
managerial skills that effect their opportunity for profit and loss.
167
Uber and
Lyft both tout that because their drivers are in charge of their own schedules,
they can make as much or as little money as they want.
168
However, this is
true for normal employees who also have the opportunity to increase their
income by working more hours or taking overtime shifts.
169
Rather, this
factor asks whether the worker can make decisions to hire others, purchase
material or equipment, or advertise in a way that would affect their
opportunity for profit or loss beyond just the current job they are in.
170
This
is the difference between a janitor who does not independently solicit work
from other clients, does not advertise services, and cleans office spaces that
he is assigned, compared to a janitor who produces his own advertising,
negotiates contracts, and can hire helpers to clean offices that he chooses.
171
In applying that analytical framework, it is clear that Uber and Lyft
drivers do not have the ability to exercise their own managerial skill to
increase their profit or loss as is required by this factor. Yes, drivers can
work more hours and attempt to do their job as well as possible to increase
customer ratings and potential tips.
172
However, that is not managerial skill
under the Economic Realities test. Uber and Lyft drivers are assigned by the
corporation to a rider, they can not personally advertise for further
opportunities outside of their current ride in order to increase profits.
Additionally, they have no say in the ‘contract’ they have with the rider.
173
In other words, they can not choose how much they want to charge, what
route to take, or even who they want to pick up. The drivers sign into the
app, are given a task, complete the task, and are assigned another task by the
company. A driver’s opportunity to increase profits through managerial skill
is meaningfully limited, and thus they resemble employees.
167. U.S. DEP’T OF LABOR, supra note 16, at 8.
168. See How Are Fares Calculated supra note 23; see How Your Pay is Calculated
supra
note 26.
169. U.S.
DEP’T OF LABOR, supra note 16, at 8.
170. Id.
171. Id. at 8–9.
172. Lyft has always had an option to provide drivers with tips. How to Tip Your Driver,
LYFT (Oct. 30, 2017), https://help.lyft.com/hc/en-us/articles/213583978-How-to-Tip-Your-
Driver. Uber does not have a tipping option. However, as a result of the class action lawsuit
by Shannon Liss-Riordan against Uber that was discussed above, in Massachusetts and
California riders now have the option to tip their drivers after the ride. Stephanie Rosenbloom,
To Tip or Not to Tip Your Uber Driver, N.Y.
TIMES (May 18, 2016), https://www.nytimes.
com/2016/05/22/travel/uber-taxi-tipping.html.
173. See discussion of rate fixing model supra, note 23, 26.
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48 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
C) The extent of the relative investments of the employer and the
worker
The relative investment factor focuses on the “nature and extent” of the
investment that the worker and employer have put into the business.
174
For
a worker to be considered an independent contractor, they will have had to
have made a significant investment (relative to that of the employer), and as
a result of the investment bare some risk of loss. Investments in tools
175
and
equipment,
176
both big and small, have been used in the consideration of this
factor.
177
Looking at Uber and Lyft drivers, it is unclear what investment, if
any, they have made. Most drivers use their own personal vehicles and
cellphones while driving. It is possible that some of the drivers have gone
out of their way to purchase vehicles or cellphones in order to drive, however
because the vehicles double for personal use it would not be solely
considered a business expenditure.
Uber and Lyft drivers do pay for their own cellphone plans, gas,
insurance, and wear and tear on their vehicles.
178
However this investment
does not cause drivers to bare risk of loss. Thus, Uber and Lyft driver’s use
of their personal vehicles and cellphones can not entirely be said to be an
“investment” in their job that differs from a normal employee who uses their
car and cellphone during work (i.e., outside salesperson). On the contrary,
Uber and Lyft have made significant investments into their overall
businesses. They are massive corporations with office space in San
Francisco, world-wide marketing campaigns, lawyers, engineers, and policy
makers. Similarly, Uber and Lyft bare significant risk on their investment
into their business. This includes liability to regulatory agencies, future
shareholders, and any other people they have business contracts with. In
comparison, Uber and Lyft’s investment into their companies is massive
when compared to that of their drivers.
D) Whether the work performed requires special skills and
initiative
The special skill and initiative factor makes a similar inquiry as the
managerial skills factor, in that it considers the worker’s “business skills,
judgement, and initiative” to determine employment status.
179
Courts
180
174. U.S. DEP’T OF LABOR, supra note 16, at 9.
175. Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979) (holding
that strawberry grower’s investment into light farming equipment was minimal when
compared to employer’s investment in land and machinery).
176. Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436, 1442 (10th Cir. 1998) (holding that
$35,000-$40,000 investment of workers to buy rig equipment was not significant enough
when compared to the massive equipment expenditures by the employer in its own business).
177. U.S.
DEP’T OF LABOR, supra note 16, at 9.
178. Dubal, supra note 11, at 121.
179. See U.S.
DEP’T OF LABOR, supra note 16, at 10.
180. Brock v. Superior Care, Inc., 840 F.2d 1054, 1060 (2nd Cir. 1988) (reasoning that in
order for nurses to be considered independent contractors, they have to exercise their skills in
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have stated that for business skills to be indicative of independent contractor
status, they must be exercised in some independent way.
181
Furthermore,
mere efficiency in performing work is not sufficient to satisfy this factor.
182
A useful comparison is a skilled carpenter who provides his services to a
construction firm, and is told when to work and where.
183
He doesn’t make
independent judgments on the job site, order the materials, do bidding for the
next job, or determine the sequence of work.
184
Compare to an independent
carpenter who works for a variety of construction companies, markets his
services, and orders his own materials complete jobs that he chooses to work
on.
185
Uber and Lyft drivers resemble the first carpenter. They are assigned
a task, told how to complete it (what route to take), they do not set their own
price,
186
and they can exercise no significant business skill or initiative other
than doing their job effectively. Because of the lack of opportunity to
exercise any business skill or initiative, this factor weighs in favor of
employee classification.
E) Permanency of the relationship
Increased permanency increases the chances that a worker will be
considered an employee.
187
An indefinite work relationship would be that of
a typical at-will employee as opposed to an independent contractor who
typically works from project to project.
188
The Department of Labor also
notes that if an independent contractor is hired on to work continuously on
projects, their work relationship can resemble that of an employee.
189
Many
Uber and Lyft drivers work for their respective companies continuously,
however it would be inaccurate to generally define the relationship as
indefinite. However, as the Department of Labor noted, the transience of a
given employment relationship should always be considered within the
context of the industry itself.
190
For example, nurses have an especially
transient workforce in that the nature of their profession dictates that they
switch employers frequently.
191
So in context of their profession, the lack of
permanence of nurses’ employment relationship does not necessarily mean
they are independent contractors.
192
The gig-economy itself lends itself to
an independent way that demonstrates business like initiative).
181. U.S.
DEP’T OF LABOR, supra note 16, at 11.
182. Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 305 (5th Cir.
1998) (reasoning efficiency in performing work is not the type of initiative that is indicative
of independent contractor status).
183. U.S.
DEP’T OF LABOR, supra note 16, at 11.
184. Id.
185. U.S.
DEP’T OF LABOR, supra note 16, at 11.
186. See supra note 172 for discussion of tipping.
187. U.S.
DEP’T OF LABOR, supra note 16, at 11.
188. Id. at 12.
189. Id.
190. Id.
191. Brock v. Superior Care, Inc., 840 F.2d 1054, 1060 (2nd Cir. 1988).
192. U.S.
DEP’T OF LABOR, supra note 16, at 11.
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50 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
transience,
193
and therefore the permanence of the drivers’ relationship with
Uber and Lyft should be considered within that context. Nevertheless, this
is one of the factors in the Economic Realities Test that does not weigh
heavily in favor of gaining employee status.
F) The degree of control exercised or retained by the employer
The final factor in the Economic Realities Test analysis asks whether the
worker actually controls meaningful aspects of their work so much so that it
can reasonably be said that they are truly an “independent business
person.”
194
Control should also be analyzed in the context of whether the
worker works from home or offsite.
195
Finally, modern technological
advances that allow companies to maintain significant monitoring and
control over their workers without much engagement should also be
considered.
196
Uber and Lyft use technology to exercise an exceptional amount of
control over their drivers. Once signed into the app, Uber and Lyft tell
drivers which passengers to pick up,
197
where to bring them/what route to
take,
198
how much each the driver will be paid for the ride,
199
standards of
driver behavior within the car,
200
procedures for if something is left behind
in the driver’s car,
201
and then uses their technology to add another passenger
to the driver’s queue.
202
The behavioral standards that Uber and Lyft impose
on their drivers are extensive. As discussed previously they include but are
not limited to: requiring drivers to pick up passengers with service animals,
limiting drivers’ ability to give free rides to family or friends, forbidding
driver’s from having non-passengers riding along in their car, inability to
193. There are multiple websites that dictate to gig-economy workers how they can
successfully driver for Uber, Lyft, and other food delivery services. Scott Van Maldegiam,
How To Drive For Uber and Lyft at the Same Time, THE RIDESHARE GUY, (July 18, 2016),
http://therideshareguy.com/how-to-drive-for-uber-and-lyft-at-the-same-time/; Drive for Uber
and Lyft at the Same Time, R
IDESHAREAPPS.COM, (last updated Feb. 10, 2016), https://ride
shareapps.com/drive-for-uber-and-lyft-at-the-same-time/.
194. U.S. DEP’T OF LABOR, supra note 16, at 13.
195. Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1384 (3rd Cir. 1985), reasoning
that the fact workers were able to make their own hours and experienced little direct
supervision are largely insignificant in the analysis given that such circumstances are typical
of homeworkers.
196. Id.
197. Eisenrey & Mishel, supra note 139, stating that when an Uber or Lyft driver’s app is
on they are notified of rides in the area which they must timely accept or deny.
198. How To Navigate a Ride,
LYFT, https://help.lyft.com/hc/en-us/articles/213585858-
How-to-Navigate-a-Ride (last visited Oct. 30, 2017); see also Let The App Be Your Guide,
UBER https://www.uber.com/drive/partner-app/ (last visited Oct. 30, 2017).
199. See supra note 23, 26.
200. See supra, note 56, 60 for extended discussion of Uber and Lyft’s driver rating system.
201. See supra note 96, 97 for extended discussion of Uber and Lyft’s lost and found
systems.
202. Eisenrey & Mishel, supra note 139, discussing that when an Uber or Lyft driver’s
phone application is on they are notified of rides in the area which they must timely accept or
deny.
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cancel a ride because the distance is too short, and inability to promote a
competitor.
203
Finally, drivers are constantly monitored through an extensive
rating system, which gives drivers passenger and company commentary on
their behavior
204
and notifies the driver if they are in danger of falling below
what the company considers to be an acceptable rating.
205
In fact, the only
aspect that Uber and Lyft do not exercise control over is when drivers
drive.
206
However, courts have held
207
merely not determining the workers’
hours is not indicative of independent contractor status, as the modern trend
is towards flexibility of work schedule.
208
Uber and Lyft use technology to
exercise control over most aspects of the drivers work, and thus this factor
tends towards employee status.
V. CONCLUSION
The Economic Realities Test is not a perfect test. Its critics have argued
that the test has led to inconsistent results.
209
Additionally, critics have noted
that in applying the test, it tends to leave out workers who do not have a
single job or boss and are arguably the most economically vulnerable.
210
The
most notable of these vulnerable workers are day laborers.
211
Critics are right
in that the Economic Realities test at times does not answer the call of the
most vulnerable. However, as of now it is perhaps the broadest scoped and
most widely utilized test to determine who is an employee and who is an
independent contractor.
212
As a test that emphasizes qualitative approach
and contextual understanding based on the type of work,
213
it leaves much
room for courts to infuse equitable principles into the employment status
analysis. This is not to ignore the plight of day laborers and other workers
who find themselves perennially trapped in the lowest rungs of the
workforce. Rather it is to say that if employee status is ever to reach those
vulnerable workers, it will likely via through an extension of a practical
examination like the Economic Realities test.
Through the application of the Economic Realities test done above, it is
clear that Uber and Lyft drivers should be classified as employees. The work
203. Hartmans, supra note 120.
204. See supra note 56, 60.
205. Hartmans, supra note 120.
206. Both websites tout that drivers are their own bosses. See Lyft, supra note 160; G
ET
THERE, YOUR DAY BELONGS TO YOU, https://www.uber.com/ (last visited Oct. 30, 2017).
207. See Snell, 875 F.2d at 806 (reasoning that flexibility in work schedules is common and
not indicative of independent contracting itself); see also Doty v. Elias, 733 F.2d 720, 723
(10th Cir. 1984) (arguing that a relatively flexible work schedule alone, does not mean a
worker is not an employee).
208. U.S.
DEP’T OF LABOR, supra note 16, at 13.
209. See Dubal, supra note 11; see also Zatz, supra note 55.
210. Id.
211. Id.
212. U.S.
DEP’T OF LABOR, supra note 16, at 13.
213. See generally, U.S.
DEP’T OF LABOR, supra note 16.
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52 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
the drivers perform is an integral part of both companies ridesharing
business. Drivers do not have the ability to exercise their own managerial
skill to affect profit or loss, and the drivers do not exercise any specialized
business judgement. Additionally, drivers’ use of their personal cars or
cellphones is a negligible investment when compared to Uber and Lyft’s
investment into their own corporations. It is true that driver’s relationship
with Lyft and Uber can not in general be characterized as exhibiting
permanence. However, in returning to the final factor, once a driver has
chosen to work and turn his or her app on, Uber and Lyft use technology to
exercise control over nearly all aspects of the drivers work, from the
significant to the mundane. The heart of the Economic Realities inquiry is
whether the worker is truly in business for themselves, or rather an
economically dependent employee who works for an employer. Uber and
Lyft drivers are the latter.
Despite all of the aforementioned, given the current political climate and
ongoing litigation around the issue, Uber and Lyft drivers should not expect
to gain employee status all that soon. There are currently two ways that
drivers could gain employee status. The first is through a class action lawsuit
that encompasses so many drivers that Uber and Lyft would have to change
their national employment policy. This would be similar to what recently
happen in the UK, in which a ruling by a London employment tribunal held
that Uber was misclassifying drivers as “self-employed” and that they must
be classified as “workers.”
214
In the U.S. there have been class action
lawsuits against Uber and Lyft to gain employee status, however as noted
previously the two most significant are currently in the process of being
monetarily settled without changing drivers’ employee status.
215
While
neither of these lawsuits bar further litigation on the issue, there is a
tangential case regarding arbitration agreements that could eliminate the
ability to amass a large plaintiff class of Uber or Lyft drivers.
When a driver signs up to work for Uber or Lyft, they sign a standard
contract which includes provisions that prevent the drivers from joining class
action lawsuits.
216
More specifically, the contract includes an arbitration
agreement that prevents the drivers from taking disputes to court and other
214. In the UK, the term “worker” is the equivalent of an American “employee” and “self-
employed” is the equivalent of an “independent contractor.” Chris Johnston, Uber Drivers
Win Key Employment Case, BBC (Oct. 28, 2016), http://www.bbc.com/news/business-
37802386.
215. Shannon Liss-Riordan is currently negotiating a $100-million settlement in a lawsuit
against Uber with a class of 385,000 drivers. She also just got approval for a $27-million
lawsuit against Lyft with roughly 95,000 putting in claims for payment. Neither of these
settlements include a change in employment status. See introduction for extended discussion
of the two lawsuits.
216. Joel Rosenblatt, Uber’s Drivers Win the Backing of U.S. Labor Watchdog, B
LOOMBERG
TECHNOLOGY, (Nov. 2, 2016), https://www.bloomberg.com/news/articles/2016-11-02/u-s-
labor-panel-backs-uber-drivers-in-class-action-fight.
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provisions that prevent workers from leveraging class action lawsuits.
217
The
driver members of the current class actions led by Liss-Riordan were only
allowed to proceed because their lawyer found holes in the earlier versions
of Uber and Lyft’s contracts.
218
These holes have since been closed, and
have already prevented class action suits against the companies from
proceeding in Arizona, Florida, Ohio and Maryland.
219
There is a case
heading to the Supreme Court, Ernst & Young LLP v. Morris,
220
that would
likely affect the validity of Uber and Lyft’s arbitration agreements.
221
After
Justice Scalia’s death, it was believed that the justices would be split on the
validity of arbitration agreements like Ubers. Thus, whoever was nominated
onto the Supreme Court to fill Justice Scalia’s seat would likely be the
deciding vote.
222
Given President Trump’s nomination of pro-business
Justice Neil Gorsuch, it is unlikely the decision will bode well for Uber and
Lyft drivers.
The other way Uber and Lyft drivers can gain employee status is if the
federal government filed a suit on behalf of the drivers. This was not a
particularly far off alternative in 2016. Under the leadership of Jenny Yang,
the Equal Employment Opportunity Commission made advancing workers
rights in the gig economy its primary focus of the coming year.
223
In fact,
Shannon Liss-Riordan has filed a claim with the EEOC on behalf of an Uber
driver that alleged he was deactivated from the app unfairly as a result of
racial biases.
224
However, it is unclear whether or not a claim on these
217. Joel Rosenblatt, Uber, Lyft Driver Settlements Signal Gig Economy Victories Ahead,
B
LOOMBERG TECHNOLOGY (June 2, 2016), https://www.bloomberg.com/news/articles/2016-
06-02/uber-lyft-driver-settlements-signal-gig-economy-victories-ahead.
218. Id.
219. Rosenblatt, supra note 217.
220. This case was brought by two employees of Ernst & Young who signed a “concerted
action waiver” as a condition of their employment. The waiver mandated that all disputes
against the company go to mandatory arbitration. The Plaintiffs filed a class and collective
action claim under the FLSA alleging employee misclassification and denial of overtime pay.
Ernst &Young sought to enforce the arbitration agreement. Plaintiffs argued was unlawful
under the Nation Labor Relations Act, Ernst & Young argued the agreements were valid under
the Federal Arbitration Act. Two other cases dealing with similar arbitration agreements,
Epic Systems Corp v. Lewis and National Labor Relations Board v. Murphy Oil USA, Inc.
were consolidated with Morris. The question before the court is “Whether the collective
bargaining provision of the National Labor Relations Act prohibit the enforcement under the
Federal Arbitration Act of an agreement requiring an employee to arbitrate claims against an
employer on an individual, rather than collective, basis.” Ernst & Young LLP v. Morris,
SCOTUS
BLOG, http://www.scotusblog.com/case-files/cases/ernst-young-llp-v-morris/ (last
visited Nov. 3, 2107)
221. Masunga, supra note 4.
222. Id.
223. Jon Weinberg, Gig News: EEOC Strategic Enforcement Plan Prioritizes Gig Economy,
O
N LABOR: WORKERS, UNIONS, AND POLITICS (Nov. 30, 2016), https://onlabor.org/2016/
11/30/gig-news-eeoc-strategic-enforcement-plan-prioritizes-gig-economy/.
224. Dan Adams, Boston- Based Attorney Argues Uber’s Star Ratings Are Racially Biased,
B
OSTON GLOBE, (Oct. 7, 2016), https://www.bostonglobe.com/business/2016/10/06/attorney-
for-uber-drivers-says-star-ratings-are-raciallybiased/R28mqWL6ShjMFB5xAr3uGL/story.
html (discussing driver Thomas Liu’s termination from the app after his rating fell below a
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54 HASTINGS WOMEN’S LAW JOURNAL [Vol. 29:1
grounds would affect drivers’ employee status. This is especially the case,
given that the issue could be remedied by something as simple as Uber
agreeing to look at factors beyond ratings prior to termination.
225
It is also
possible for the NLRB to file a suit on behalf of Uber and Lyft drivers.
However, given the current political climate it is not entirely likely that a
federal agency will take it upon itself to step into the thicket of regulating
big businesses in the gig-economy by asserting rights on behalf of their
independent contractors.
In sum, despite clear warning signs that Uber and Lyft drivers are being
misclassified as independent contractors, their current employment status is
unsettlingly settled.
4.6. Liu argued that his average customer rating was unfairly influenced by customer bias
against Asians. As a result, Liss-Riordan filed a claim to the EEOC on Liu’s behalf alleging
that Uber’s rating system is racially discriminatory because of passenger biases).
225. Adams, supra note 224.
