Federal Judge Rejects Uber's $100M Settlement Offer to Its Drivers
Now it is time for the real game of chicken. Since the Federal District Court Judge overseeing what is likely the biggest labor law case in history has rejected the $100,000,000.00 settlement Uber was going to pay to its drivers, both sides will have to move forward. The stakes are high for the drivers, even higher for the lawyers for Uber and the highest for Uber itself. The drivers have little to lose as most would only get peanuts. The lawyers for Uber agreed to reduce their legal fee from $25,000,000.00 to $10,000,000.00 to push the settlement through. But for Uber, it may be winner take all. Uber may move forward and win simply because the appeals court may not permit the class action to move forward at all, thus killing the case as all drivers would be then forced to arbitration on a case by case basis. On the other hand, if the case moves forward in class action status and Uber loses, the gig economy may be upended, Uber's $65 billion dollar valuation make implode and Uber as we know it may be over. I for one am happy that the case must move forward. The drivers are the client's and they should be zealously represented and not sold out by their lawyers who simply wanted to cash in before the oven got too hot and they were at a severe risk of losing any legal fee they could have earned. As I have written before, I have never seen a case so clear for employee-employer relationship as Uber and its drivers in my 20 years of practicing law. The Judge overseeing the case must agree that the case has great merit, otherwise, the $100M offered would have been a windfall and no judge would have declined to approve such a settlement for a meritless case. Time will tell what happens when the appeals court rules on the class action status (obligation of each driver to go to arbitration as opposed to court) and we will see who blinks first.......the 800 pound Gorilla (Uber) or the lawyers who are now forced to either move the case forward on its merits or to obtain a better and increased monetary settlement from Uber. Grab tour seats because this issue is far from over.
The City and TLC Treats Uber and Lyft Unequally From the Rest of the Industry
By now, Uber is known for a uniquely aggressive approach to establishing a market foothold: They push themselves into a market, cause a ruckus, upset people, break rules and then (seemingly as a last resort) work on bringing everybody together. In New York City, the local government and the Taxi and Limousine Commission (TLC) allowed Uber and Lyft to operate in an illegal fashion for so long that the TNCs were eventually absolved from their past indiscretions, in exchange for finally submitting to the TLC’s regulatory scheme.
At this point in time, we are used to the personality of Uber, which consists of using unfair and often illegal acts to dominate the world. While we do not condone this behavior, the TLC’s actions of continuing to accept Uber’s plea for forgiveness, rather than mandating that they ask for permission first, is arguably more reprehensible than Uber’s own conduct. Because of the disruption caused by Uber and Lyft, the TLC has now taken the approach of regulate first, then ask questions later. But the TLC still fails to recognize or admit that their well-intended regulations continue to be ignored by Uber and Lyft – and their acts of absolving Uber from continued violations is not only inherently unfair, but often does more to restrict entrepreneurs than protect consumers.
The livery industry is so upset, not because they are being beat by technology, but because we now have to compete against a company who is not required to play by the same rules. What is more unfair than the government treating two entities that provide the same service in an unequal fashion?
Uber and Lyft relish their status as disrupters and have a long record of operating in violation of local laws. They have done this in New York, across the nation and around the world. While the TLC eventually drafted new rules for Uber and Lyft to play by in a fair fashion, the TLC’s failure to enforce these rules is reprehensible. Uber and Lyft are still continuing with their dirty old tricks. After causing the breakdown of the yellow taxi and black car industries, Uber and Lyft are now after the livery industry, seeking to conquer it with tactics that completely disregard existing laws.
Uber and Lyft's latest trick involves a direct attack upon the livery industry. A year ago, the de Blasio administration passed a rule that prohibits what's called “cross-dispatching,” where black car bases (like those owned by Uber and Lyft) cannot dispatch livery cars and vice-versa. This might seem like some obscure regulation, but the rule was created to protect livery customers who typically live outside Manhattan and can’t afford Uber's diabolic surge pricing practices. (Many livery customers don’t even have a credit card, which is necessary for all Uber transactions.) The rule was also created to protect livery drivers who are not covered by either the Black Car Fund or the Livery Fund. If a livery driver accepts a dispatch from one of Uber or Lyft’s black car bases and is subsequently involved in an accident, they are covered by neither Fund. Furthermore, when Uber and Lyft illegally dispatch a driver affiliated with a community car base, they also hurt the poorer and older members of our communities who are supposed to receive a binding price quote when a livery driver picks them up. The binding price quote is the protection afforded to those members of our community who request services via a livery driver, and it is one of the primary differentiators between a livery base and a black car base.
While Uber and Lyft’s illegal and underhanded tactics are despicable, what is even worse is that the TLC has ignored the pleas of the livery industry to compel Uber and Lyft to comply with the law. For example, several livery bases and myself, on behalf of the Livery Roundtable, have already alerted the TLC about Uber and Lyft’s illegal activities, and even provided them with proof, but the TLC has, to date, done nothing to stop them. If the TLC refuses to hold Uber and Lyft accountable for their illegal actions, then how can the TLC claim to be fair and purport to apply the law equally to all those that come under their regulatory authority. The TLC is too busy figuring out how to regulate more, rather than enforce the regulations that already exist. What is the good of more regulations when the TLC does not enforce the ones they have in the first place?
It is one thing for a company to enter the marketplace with a superior product and/or provide superior service and obtain market share on those merits. It is another story when entities, such as Uber and Lyft, are able to enter the market, totally disrupt it, break the law, and be absolved of all wrong doing by simply asking for forgiveness. If this was all in the past, I would move on to other issues, but I am talking about the present. The TLC still has not taken any action in response to the uncontroverted proof that I submitted to them of Uber’s illegal actions.
I suppose to the TLC is it is acceptable for them to have two standards – one for Uber and Lyft and one for the rest of the industry. The livery industry is not Uber or Lyft, and will never be. We pride ourselves on being made up of over 400, mostly mom-and-pop car service businesses. The problem is that the livery industry is worried that because of Bill de Blasio’s bruising fight with Uber last summer, the administration will continue to take an even more hands-off approach to Uber and Lyft. Uber and Lyft should not get a free ride at the expense of car service companies and their customers, just because they have the money to launch a strong marketing campaign against the de Blasio administration. We hope the administration takes action… and fast. While the TLC sits idly by, our businesses and customers are suffering.
By: Steven J. Shanker, Esq.
Uber is Creating a Jobless Future
Professional car service and taxicab drivers are fighting for survival in New York City in a new economy which is trying to replace them with other means of transporting customers. New business models like those of Uber and Lyft are threatening drivers and customers alike. Car service and taxicab drivers are joining a long list of people replaced by new technologies: grocery-store clerks, dockworkers, retail employees (especially from book, music, and video stores), etc. As the twenty-first century proceeds, it is replacing jobs with apps. This is a new lower-wage and even jobless model of business. There are three problems at work, which are creating a new jobless economy, and are associated with, respectively, the business models of Uber along with the likes of Wal-Mart, and Amazon.
The Uber Problem
The first problem with our "new economy" is the Uberization of the work force and the business model of replacing well-paid, full-time, professional workers with low paid amateurs. While Uber drivers bring in somewhat more revenue per hour for short shifts than do cab drivers (who make much more money per hour for long shifts than for short ones), they are also entirely self-financing (car, gas, insurance, maintenance, etc.), unlike most cab drivers (who depend on their companies to provide some or all of their operating costs). Such jobs are often intended by car-owners to supplement other income, or while looking for a better job, rather than (as for most cab drivers) serving as a long-term profession. The Uber model of transportation has been deconstructing the regulatory environment designed to keep us safe, allowing drivers to work without undergoing local police investigation (generally required in most places for cab-driving licenses). They also drive cars that are not inspected by any authority, in contrast to expensively inspected taxicabs. Uber drivers have been involved in many physical and sexual on passengers and bystanders and the is creating an ugly reality that existing regulations have not helped to prevent.
Unfortunately the dangers posed by Uber to our communities are not limited to the immediate physical dangers posed by improperly licensed and unvetted drivers, operating uninspected vehicles, and with no regulatory intervention in the employment of potentially dangerous individuals (with criminal backgrounds, or with high accident rates). Uber is also teaching passengers that any idiot with a car can replace a professional driver operating an expensively fitted, inspected, and insured vehicle. Uber is teaching us to disrespect professional means of income-earning, and to prefer a cheap but dangerous alternative. Uber is teaching us to prefer a less effective and less prosperous economy, and offers us discounted car rides in return for our safety, our jobs, and our souls. As the Uber model passes (as it ultimately will) to cargo transport and other business sectors, our economy will replace more full-time jobs with low-pay, part-time work. Wealth will be created for the designers of Uber, Lyft, and other services. But such services are also transforming middle-class jobs of the 20th century into lower-class jobs of the 21st century. Uberization is diminishing jobs as drivers themselves make less money and consume less, driving demand and production down as well.
Uber is not alone, nor is it the first manifestation of this problem. From the 1950s through the 1980s, store clerks and cashiers earned income levels closer to the middle class. Such workers had to memorize many prices and categories of products, and operate complicated registers. They required training and experience to do their jobs properly; and could only be fired at the expense of the investment in training a new employee. However, the development of bar-codes and scanners enabled grocery and retail stores to hire lower-paid workers, and to deploy new workers with little training and experience (enabling bosses to replace more easily those wanting raises or organizing for benefits). A career profession became merely an entry-level job for adolescents; and a job capable of supporting a small family became a minimum-wage job pushing the professional into looking for work elsewhere.
A similar phenomenon took place in the 1960s, when factory farming began replacing family farming. Factory farms employ low-wage workers with little to no experience (often illegal immigrants and young children) and provide consumers with cheap food that also pushed family farm workers into seeking work elsewhere (perhaps becoming grocery-store clerks, or cab drivers). While few would argue that high food prices are good for a population, the path from that step led to the replacement of other middle-class professions with part-time and/or lower-class pay rates, such as our retail workers and cab drivers. Uber is merely the latest nail in the coffin of the middle-class worker, a coffin we have been building since the middle class first expanded so successfully in the middle of the last century.
The Wal-Mart Problem
Another effect impacting our economy is its growing Walmartization. Wal-Mart has sought to provide low-cost products to consumers by encouraging American manufacturers to push manufacturing jobs to overseas locations. In order to gain customers, Wal-Mart has deliberately deconstructed the American middle class by shipping overseas the jobs on which we depend. Consumers giving their money to Wal-Mart pay for the privilege of exporting and eliminating our jobs, our economic security, our union rights, our tax revenues, and our social services.
As with Uber, Wal-Mart is of course not acting alone. Since the 1990s NAFTA has helped to globalize American manufacturing. And the US has been bleeding manufacturing jobs for decades, as foreign nations have seen increases in educational levels, technical familiarity, physical health, and political stability; while also remaining below US rates of income (all things encouraging ever more investment in new overseas plant capital). However, Wal-Mart developed a specifically targeted plan for pushing manufacturing overseas, and at the same time kept its own workers at low wages (forcing many to seek government-funded welfare and social support). The company has not only exported middle-class American jobs; but also maintains pressure on the labor market to keep wages at or below poverty levels. The company’s workers become absolutely dependent on companies like Wal-Mart for their cheap food and products, the only products they can then afford. Wal-Mart cooperates with Uber and other sectors in deprofessionalizing the labor market (by continuing to push retail wages lower), and in depressing wages and income. Wal-Mart has been steadily converting the middle class into the lower class (driving down consumption and demand and production); and the working class into the unemployed.
The Amazon Problem
The final effect driving us toward universal unemployment is the Amazonification of business; and the related automation of all work areas. Amazon has amassed an enormous financial empire by replacing “brick and mortar” businesses with instantaneous touch-screen or keyboard shopping by computer, phone, or tablet. In the process, the "Amazon Effect" has put out of business bookstores (including major chains like Borders), record stores (also killed by iTunes and other music-sharing technologies), and video stores (with an even more forceful shove by businesses like Netflix). These impacts have hurt large companies and family-owned businesses alike; and they have killed off more jobs than the growing empires of Amazon and other such companies have created. Amazon’s deconstruction of “brick and mortar” retail operations did not merely (like Uber) push middle-class jobs into the lower class; or (like Wal-Mart) push middle-class jobs overseas. Instead, the jobs lost to the Amazon business model (and to data services that replace stores providing books, music, and video) are lost completely, and forever. For example, Netflix has effectively replaced video stores across the nation; and yet it currently employs approximately 4000 people.
Some businesses have survived the scorched earth left by the “Amazon effect” by emulating the workerless e-commerce model (like Barnes and Noble, which while still maintaining physical book-stores sells a great deal of its merchandise through its automated online ordering system). Other businesses have survived by becoming tributary fiefdoms of the Amazon empire, selling their products through Amazon’s order processing service (which provides small businesses with a potentially global clientele). But the failure of 20th century, labor-intensive retail to compete with 21st century, information-intensive business models tells the full story. Even though some businesses have held on by bowing to the inevitable, the inevitable has killed far more business opportunities and actual jobs than it has created. Those opportunities created on the information super-highway have largely been monopolized by a few powerful corporations like Amazon, Netflix, Apple, etc.
As with Uber and Wal-Mart, Amazon did not create this phenomenon, but jammed its foot down on the accelerator of the process already underway. The “Amazon effect” are the results of automation and the improvement of technology and software. Grocery stores also automate and eliminate jobs by using self-checkout lanes (enabling a smaller work force to manage larger numbers of customers and products). Apps replace workers and specialists. Expensive and expanding technologies are going to increase also the number and diversity of jobs lost to automation and applications, including many previously seen as “untouchable” (requiring too much dexterity, skill, creativity or intuition, etc.; all of which are now being surpassed by better technologies and software).
In the next decade, self-driving cars are going to replace many of today’s cars. The self-driving car will launch the next work-force revolution. Customers frustrated by sketchy and unstable Uber drivers (who by then will have out-priced cab drivers into obsolescence) will enjoy new services which simply send them self-driving car-bots. Owners of self-driving cars will realize that having their car sitting in the driveway, or in the parking lot at work, is a lost opportunity to have the car make money. New apps will enable owners of such cars to release their cars to leasing services until they need them back. Fewer and fewer people will own (and buy) cars, as it becomes easier and cheaper to simply share cars through such systems. And fewer people will make them. Soon, no one will be driving cars for a living.
Into the Jobless Economy We Go!
These three effects are combining to create the new, jobless economy of the 21st century. Uberization and related effects are helping to deconstruct middle-class incomes and our respect for middle-class professions. Walmartization is transferring ever more jobs overseas, and maintaining ever more poor people on low-level incomes that force their dependence on government assistance. Amazonification and automation are reducing and eliminating the work force entirely, insulating wealth from the need to employ people at all. These effects are progressively transforming capitalism from a labor-intensive means of generating wealth (which “shares” at least a portion of the wealth with the working classes responsible for actually creating it) into an information-intensive model no longer requiring workers.
The jobless economy also inhibits the formation of small businesses by those without inherited or pre-established wealth. Small businesses cannot compete on the information superhighway with major corporations able to make and exploit new applications and technologies (and economies of scale) which push their operating costs below those of local businesses. Local businesses are dependent on many other large businesses to move outside and attract global clientele. As the century progresses, both work and entrepreneurial opportunities are going to be increasingly monopolized at the top, and are going to be increasingly absent at the middle and bottom.
Ultimately, there are three places these effects can lead us. The first is the realization that, if people are not going to have either work or business opportunities available to them, then the state is just going to have to provide them with food, clothing, housing, medical care, etc. This will create the nightmare: the total welfare state. An uglier option is a dystopian future of mass hunger, disease, suffering, and death. Finally, a third path takes us through violent revolution by the hungry masses; although that option will likely still lead to one or the other of the first two (welfare state, or dystopia of hunger and death). Are you ready to explore these exciting new vistas? Then, hop into an Uber car and enjoy the ride!
Who Is The Real Winner In The Uber $100 Million Class Action Settlement
Who Is The Real Winner In The Uber $100 Million Class Action Settlement
While Uber just settled two major class action lawsuits that were pending in California and Massachusetts to the tune of $100 Million Dollars, the settlement does not amount to much and really does not settle anything. This was the case that was supposed to knock Uber off the high perch it has sat on since its founding in 2009. $100 Million Dollars is a lot of money, but with billions in financing, this amount is a very modest price for Uber to pay to protect its business.
The thing is, the settlement does not really settle anything. By settling these lawsuits, Uber has forestalled any precedent being set on the question of whether Uber—and others in the so called “gig economy” has a legal obligation to classify its workers as employees. A loss of a case like this would cost Uber billions of dollars, eroding its potential profitability and its supposed value.
The question of whether Uber drivers are independent contractors or employees centers largely on how much control the company exerts over them. The main difference is that if drivers are employees, then Uber has to pay drivers benefits like health insurance, paid time off as well as payroll tax and other large costs associated with benefits that employees are entitled to under the law.
The key question left unanswered by the settlement announcement is whether the drivers are receiving enough in return for what they're giving up. Nothing fundamental in the balance of income and expenses will change as a result of the deal. Uber drivers will still have to pay for gas, insurance and wear-and-tear on their vehicles, and Uber will retain the right to set fares and extract fees and commissions of more than 20%.
The settlement of these cases is a great deal for Uber because, at least for the moment, it removes what was plainly regarded as a massive threat to its business. Uber portrays the deal as a complete victory for drivers because according to Uber, drivers value their independence. This is yet another example of Uber’s press relations machine operating at full steam (blow hard steam).
The settlement agreement boils down to one thing: If a judge accepts the terms, Uber can still treat its drivers as independent contractors, in exchange for a few minor concessions that address some concerns that drivers had expressed throughout the case. The main part of the settlement that directly affects Uber riders is the company’s agreement to stop saying that the tip is included in the fare. Uber often discouraged its drivers from soliciting tips from passengers because the company argued the extra step made the experience much less seamless and thus less on-demand. But riders were never prohibited from tipping their drivers; they were just told they didn’t need to. This was done because Uber didn’t want riders to have to carry around cash. Uber’s saw its cashless, friction-free payment experience as a positive differentiator from yellow taxis. The settlement does not require Uber to add an in-app tipping feature which allows riders to add a tip to their electronic bill.
The biggest change for drivers, inside and outside of California and Massachusetts, is that they cannot be deactivated from the Uber platform for failing to accept a minimum number of ride requests. Previously, drivers would receive emails or other forms of communication warning that they would be deactivated/fired if they did not raise their acceptance rate to at least 80 percent of all ride requests.
Drivers in California and Massachusetts will see more minor changes. More specifically, certain drivers in these states will receive some money form the settlement and will have the right to a new appeals panel. Out of the $100 million settlement, $84 million is the first part of the settlement and If Uber goes public, it will have to pay $16 million more. The distribution of the money that drivers receive will be based on a number of factors, but regardless of the factors, the total amount to each driver will range from $24.00 to $8,000.00.
The most significant aspect of the settlement is that drivers in California and Massachusetts get to form an appeals panel, through which drivers can appeal the company’s decision to deactivate them, and a driver association that serves in the place of a union but will not be legally recognized as one. So while there will be a remedy when a driver believes they were wrongfully deactivated, Uber will ultimately have the final say.
In the end, the Uber settlement gives some drivers a few dollars as a one-time payout, but still leaves them working as Uber employees in all but name. Since these lawsuits had the potential to force real change, it is hard to see this as their victory. In essence, Uber just paid through the nose to buy labor peace in California and Massachusetts.
The settlement completely abandons the very point of the lawsuit. The lawyers for the Uber drivers have long framed these cases as a crusade for employee rights. They defended the settlement, saying it was the best one possible given the uncertainties of continuing to trial. Anyone is the legal profession knows that lawsuits are always risky because the outcome is always uncertain. Lawsuits are also very costly. While Uber’s attorneys were undoubtedly paid very handsomely, the attorneys for the Uber drivers (approximately 385,000 of them) have had to pay the costs of litigating these cases to date all with the risk to them of not receiving a fee for its time and efforts. The attorneys for the Uber drivers are asking the judge for a 25 percent cut of the settlement, or about $21.75 million, to cover her team’s costs.
In my opinion, it seems that the lawyers for the Uber drivers are folding their cards in return for a fat fee and promises from Uber that it will make some minor changes to its driver policy. I am sure fighting Uber is a hard and arduous undertaking, but once you take case, a lawyer is supposed to do what is in the client's best interest and not their own....and certainly not where the opponent (Uber) makes out better than all of the parties. It is as if this settlement was a clear victory for Uber.
In the end, a settlement removes the biggest threat to Uber's Business model, while Uber drivers get a bit more protection by having less stringent rules before Uber can deactivate a driver and drivers are allowed to ask for tips from passengers. BIG DEAL......This is a settlement that is fair to drivers? NO WAY. NOT IN MY BOOK. The small amount of money that will be paid to drivers in California and Massachusetts is peanuts and not worth it. This lawsuit was supposed to be about vindicating the rights of Uber drivers, but a settlement of this nature does not accomplish that goal. All this settlement does is provide a big payday for the lawyers representing the Uber drivers. Yes, they worked extremely hard over the past 2.5 years, but in the end they will get about $21.75 million in legal fees from this case. This is a huge incentive for them to settle and the impetus to convenience their clients (the drivers) that the settlement will give them more rights and will vindicate their interests.
I have the utmost respect for the plaintiffs’ attorneys as they took a case and financed it all the way, but I believe they had a great case and would have won. I have been litigating cases involving the issue of employer-employee relationship in almost every forum in New York for the past 20 years and this is one of the most clear cut cases of employer employee relationship I have ever seen. So why settle, especially before the plaintiffs’ attorney even had the chance to make a motion for summary judgment asking the court to declare Uber's drivers to be employees as a matter of law? The answer is that the plaintiffs’ attorneys worked hard, paid money from their own pockets to litigate the case and they wanted to get paid.....and now they will....BUT the real issue of whether Uber's drivers are employees or independent contractors will remain unsettled.
What a shame for the drivers, because they really don't get anything here.....and what a shame for the legal profession because now it is just another case where the lawyers settle because money has that kind of effect on people. This degrades the legal profession....and kind of makes me ashamed to be a part of it. A lawyer is supposed to zealously represent the interests of their client (not their own interests). I apologize in advance to the attorneys for the drivers, but this case has turned into just another case for them to make money. It turns out that it was not about vindicating the rights of drivers. Each driver really did not have much to lose by continuing to litigate the case, but the plaintiffs’ attorneys had millions of dollars in legal fees to lose. This appears to be simply too much for them to risk. The drivers didn't have much to risk by continuing. This is a pathetic settlement that the drivers should reject as it is their case and they should demand more.
Sometimes you have to take a risk and sometimes that risk means taking a case all the way and get a decision. Yes, it would have been a big gamble for the plaintiffs’ attorneys and they did a great job thus far, but I felt so strongly about this case that if asked, I would have worked with them for free. After 20 years of practicing law, I still believe in justice...and in this case, justice was not served. Uber continues to operate with impunity, their business model survives and the drivers go on as usual, getting treated like cattle, when in fact they are as close to an employee of Uber as any case could possibly expose. Again, Uber wins, the lawyers win and the drivers, who are the represented parties, get nothing in the long run.
In the meantime, U.S. District Judge Edward Chen may refuse to approve the settlement until it provides real benefits and lower legal fees. Everything Judge Chen has said up until this point seems to suggest that he was looking forward to a jury trial in this case. The plaintiffs in Uber's case were seeking $3.4 billion, a fairly ridiculous sum but one they thought they were owed. Judge Chen could decide that $100 million isn't enough compensation, or that the reforms Uber is promising more transparency, an ability for drivers to solicit tips and challenge deactivations through arbitration, recognition from Uber of quasi-union "driver associations" don't even scratch the surface.
Until a court decides whether Uber drivers are employees or independent contractors, the debate will not end. I guess a new set of plaintiffs in other states will have to hope for a lawyer that is willing to take the risk of taking this type of case to trial and consider more than their own self interests in being compensated for their efforts rather than the cause they were supposed to be seeking, which is justice. In this case, once again, Uber is the clear winner.
Uber will pay $100 million to settle the biggest legal threat to its business, but are Drivers or Uber the real winner?????
It is crying shame to have settled this case. I am sure fighting Uber is a hard and arduous undertaking, but once you take case, a lawyer is supposed to do what is in the client's best interest and not their own....and certainly not where the opponent (Uber) makes out better than all of the parties. It is as if this settlement was a clear victory for Uber.
As we know, Uber has spent the last two and a half years embroiled in a major legal battle over its business model. The company considers its drivers to be independent contractors, but many of those drivers believe they were treated more like employees. Paying up to $100 million to settle class action lawsuits in California and Massachusetts removes the biggest threat to Uber's Business model. Drivers in those states will remain independent contractors rather than becoming employees. So who wins in all of this????? Certainly not the drivers. The small amount of money they will each receive will perhaps reimburse them for some of their past costs for gas and car maintenance, but Uber is not going to be paying any of these items to drivers in the future. The drivers get a bit more protection by having less stringent rules before Uber can deactivate a driver and drivers are allowed to ask for tips from passengers. BIG DEAL......This is a settlement that is fair to drivers? NO WAY. NOT IN MY BOOK.
Uber get to keep its business prized model and gets to claim vindication by continuing business as usual. 100 Million to them is peanuts. So we know that Uber benefits the most, but who also benefits....the lawyers for the drivers. Class action cases of this nature are supposed to be about vindicating the rights of the drivers, but for the plaintiffs attorneys it has proven to be clearly about a big payday and mega buck. Yes, they worked extremely hard over the past 2.5 years, but in the end they will get about $25-$30 Million dollars in legal fees from this case. This is a huge incentive for them to settle and the impetus to convenience their clients (the drivers) that the settlement will give them more rights and will vindicate their interests.
I have the utmost respect for the plaintiffs’ attorneys as they took a case and financed it all the way, but I believe they had a great case and would have won. I have been litigating cases involving the issue of employer-employee relationship in almost every forum in New York for the past 20 years and this is one of the most clear cut cases of employer employee relationship I have ever seen. So why settle, especially before the plaintiffs’ attorney even had the chance to make a motion for summary judgment asking the court to declare Uber's drivers to be employees as a matter of law? The answer is that the plaintiffs’ attorneys worked hard, paid money from their own pockets to litigate the case and they wanted to get paid.....and now they will....BUT the real issue of whether Uber's drivers are employees or independent contractors will remain unsettled.
In the interim, Uber, which doesn't really make money at all, will continue to save as much as 30% or so on labor costs, because independent contractors aren’t entitled to the same safety nets as traditional employees—i.e., benefits such as health insurance and minimum wage protection. They’re also responsible for paying their own business expenses. For Uber drivers, these include gas and car maintenance, which really add up.
What a shame for the drivers, because they really don't get anything here.....and what a shame for the legal profession because now it is just another case where the lawyers settle because money has that kind of effect on people. This degrades the legal profession....and kind of makes me ashamed to be a part of it. A lawyer is supposed to zealously represent the interests of their client (not their own interests). I apologize in advance too the attorneys for the drivers, but this case has turned into just another case to make money. It turns out that it was not about vindicating the rights of drivers. Each driver really did not have much to lose by continuing to litigate the case, but the plaintiffs attorneys had about $25-$30 Million dollars in legal fees to lose. This appears to be simply too much for them to risk. The drivers didn't have much to risk by continuing. In the end, for the drivers who drove the most, around 10,000 drivers, they will receive around $8,000. For the rest, the more than 122,000 drivers who have driven less than 750 miles, they should expect an average of $24. This is a pathetic settlement that the drivers should reject as it is their case and they should demand more.
Sometimes you have to take a risk and sometimes that risk means taking a case all the way and get a decision. Yes, it would have been a big gamble for the plaintiffs attorneys and they did a great job thus far, but I felt so strongly about this case that if asked, I would have worked with them for free. After 20 years of practicing law, I still believe in justice...and in this case, justice was not served. Uber continues to operate with impunity, their business model survives and the drivers go on as usual, getting treated like cattle, when in fact they are as close to an employee of Uber as any case could possibly expose. Again, Uber wins, the lawyers win and the driver, who are the represented parties, get nothing in the long run.
The settlement represents a huge win for Uber. If the lawsuit had gone to trial, and a jury decided that drivers indeed deserved to be full employees, then Uber could have suddenly found itself responsible for all sorts of extra costs, from Social Security payments to minimum wage requirements. Instead, drivers will stay "independent", and Uber keeps its costs low. Don't be surprised if you don't see any Uber drivers celebrating in the streets as a result of this settlement. Many were hoping for a much different outcome.
I believe it is obvious that the plaintiffs/drivers who wanted to be employees are going to be disappointed and they should be. Although the lawsuit was settled, for the drivers, Uber really won this case.
But drivers could end up eventually coming out on top, depending on whether the settlement is approved by US District Court Judge Edward Chen, and everything he has said up until this point seems to suggest that he was looking forward to a jury trial. The plaintiffs in Uber's case were seeking $3.4 billion, a fairly ridiculous sum but one they thought they were owed. Judge Chen could decide that $100 million isn't enough compensation, or that the reforms Uber is promising more transparency, an ability for drivers to solicit tips and challenge deactivations through arbitration, recognition from Uber of quasi-union "driver associations" don't even scratch the surface.
Another potential poise result from this settlement is that without any jurisprudence on the most critical issue of employer-employee relationship, there is nothing preventing others from championing the cause in the future. The case would be settled and not decided. Until a court decides whether Uber drivers are employees or independent contractors, the debate will not end. I guess a new set of plaintiffs in other states will have to hope for a lawyer that is willing to take the risk of taking this type of case to trial and consider more than their own self interests in being compensated for their efforts rather than the cause they were supposed to be seeking, which is justice.
The Liveries Oppose Resolution 955
The NYC City Council issued Resolution 955 calling upon the New York State Legislature to pass, and the Governor to sign, legislation that is supposed to equalize the amount of per-trip taxes imposed on taxis and for-hire vehicles in New York City.
The Livery Roundtable is disheartened with the issuance of such resolution which incorrectly and unfairly combines the for-hire vehicle sectors and assumes that since each provides transportation by pre-arrangement, that they should all be treated alike. This is just another attempt to thrust an improper tax upon a specific sector of the transportation industry which continues to reel from the never ending added regulatory burdens. For example, the NYC Livery is subject to 164 more penalty regulations than Black Car and/or Luxury Limousines. Additionally, the NYC Livery has an annual additional cost of approximate $4,500.00, which include the mandated camera and distress light in every vehicle, the Livery Bill of Rights, the driver license being mounted in the vehicle and a far more rigorous base application and renewal process.
Resolution 955 presents the Livery Industry as the sector that has “escaped” the per trip tax. Unfortunately, those who seek to support such a proposition not only turn a blind eye to the added costs that are solely borne by the the NYC Livery, but also seem to lack an understanding of the industry in general as it is mechanically unable to collect a per trip tax. This is an easy matter for the Black Car/Luxury Limousine sectors, but is simply not possible in the livery industry. Unlike Black Cars and Luxury Limousines, whereby customers pay the company and drivers pay commission on a per-trip-basis, in the Livery sector, customer pay the fare directly to the driver and the driver pays the base a flat weekly that is NOT based on a per trip basis. For these reasons, the NYC Livery’s business model precludes collecting a tax or surcharge from the passengers on a per-trip basis.
Furthermore, according to the TLC rules that provide the classifications of vehicles, Black Cars/Luxury Limousine fares must be at least 90 percent or more non-cash. It is easy to assess sales tax or per trip basis from a credit card processing transaction. Equally, the Yellow and Green taxis have deductions automated through the TPEP system which provides for the collection of surcharges. Thus it is built into the Yellow/Green Taxis system to collect taxes. Distinguishably, the Livery operates primarily on a cash basis. Such a system does not readily incorporate the ability to collect taxes. There is little doubt that imposing a tax on the NYC Livery sector will result in invasive audits and devastating fines on livery bases which are predominantly small minority owed businesses.
Unlike Black Car/Luxury Limousine, the livery is the community car for Northern Manhattan and the outer boroughs. The persons transported by livery cars are principally traveling within their communities and principally pay with cash due to insufficient credit, which distinguishes them from Black Car/Luxury Limousine that mostly utilizes credit cards and/or corporate accounts. The business model of the NYC livery is a distinctive feature of this sector of the for-hire vehicle industry and it serves to illuminate the fact that this is the exact reason why the New York State Legislature found it appropriate in 2010 to exempt the NYC Livery sector from sales tax collection. The black car/luxury limousine’s misleading claims to the contrary are clearly designed to blur for-hire vehicle sector distinctions all in a vain attempt to burden the sector of the industry that is least able to bear the costs associated with such an imposition. The exemption provided in 2010 was a conscious decision based on the legislature’s understanding that the Livery sector is unable to comply with a per-trip fee. Also, the legislature recognized that the Livery has historically been subject to regulatory burdens that make it more disadvantaged than those in the other sectors. In effect, Resolution 955’s so called “equalizing” request will only serve to further burden those least able to afford the increased costs of utilizing neighborhood community cars.
Resolution 955 describes the “blurring” of the lines between sectors as rational in order to “equalize” the burden on all sectors of the for-hire industry. The proposition is fatally flawed because it fails to illustrate how the Livery sector’s current situation hurts any of the other FHV sectors. In effect, the blurring of the lines is only to the advantage of the app companies, which are Black Cars, not Livery. While in theory, the Livery and Black Car/Luxury Limousine markets should work in a fair competitive environment, in the real world this has not been the case. For this reason, app companies have elected to become Black Car companies, a FHV category that subjects them to minimal regulatory obligations. This classification is in opposition to app companies’ characteristics which are more like the taxi service due to their on-demand service, rather than the Livery sector, which provide transportation by pre-arrangement.
As public policy, the City of New York should not be urging the imposition of financial burdens on those businesses who are least able to pay them, much less placing more monetary burdens on the persons who utilize livery service. Livery bases provide service in underserved communities, many of which are low-income communities that continue to face many economic hurdles. They require transportation that is not only dependable, but is reasonably priced. What they don’t need, nor deserve, is to pay a tax or surcharge when riding in a community car to the grocery store or to church. Unfortunately, Resolution 955 sends a message to Albany that New York City desires a regressive transportation tax system, which only helps big business and harms the underserved communities. This is hardly a tax that will serve the stated purpose of placing each sector for the for-hire vehicle industry on equal footing.
Unfair Competition
While the idea of restricting the hours of each of the Uber driver seems to be a valid course of action for the safety of the public, there is more here than meets the eye. First, Uber wants to boost its numbers (the number of drivers) and having each driver work more than 12 hours will not boost their numbers. On the other hand, if demand is great (demand from the consumer) then they will have a better opportunity to get more part time drivers on the road. This will help Uber boost its numbers so in a year from now they can say we have 10,0000 more drivers and have created 10,000 more jobs. This is far from reality. Creating a part time labor force is simply taking away form full time drivers ability to make a living. Next, limiting the opportunities for drivers to work by limiting the amount of hours they can be available smacks of direction and control. Since there is no rule from the NYC Taxi and Limousine Commission mandating that a FHV driver be limited in the amount of time they are open to receive dispatches, this is a restriction placed on the drivers by Uber which is just another one of their means of exercising direction and control over the drivers and simply another indicia of their employment of their drivers. If Uber wants to direct and control their drivers, then they should be treated like employees. Uber should stop the unfair competition by utilizing the services of drivers who are clearly not independent contractors. They are violating the labor law and at an unfair competitive advantage over other FHV car services. Competition is good for the market and the public at large, but competition by misclassifying its drivers as independent contractors gives them a competitive advantage which not only violates the rights of its drivers, but violates the protections afforded to its competitors.
Technology Disruption is Good, but Uber Disruption is a Disaster
In the rapid growth of the online gig economy, especially with the unprecedented growth of Uber in the transportation industry, many workers feel squeezed and at times dehumanized by a business structure that promises independence but often leaves them at the mercy of increasingly powerful companies. There is nothing wrong with being an independent contractor or working in the "gig economy", but there is a problem when the entity in question is named Uber.
Drivers are becoming increasingly dissatisfied and disillusioned by Uber......and no wonder why. Because Uber is not the Salvation Army and is not out to create jobs, but is out to continue to overly inflate the value of their company and then cash out via an IPO. Don’t be foolish, Uber is not looking to be "your private driver", but looking to steal your money via surge pricing (and place you in danger in the interim), destroy full time jobs, destroy existing businesses and upend the for-hire vehicle industry for the worse. People may not be, or may never have been satisfied with yellow cabs, but at least they are regulated by the NYC Taxi and Limousine Commission. This means that the vehicle has been inspected and deemed to be safe for operation and the driver has been vetted and deemed to not be a dangerous driver.
Ask any Uber driver in New York City and they will tell you that they have been relegated to being glorified taxi drivers and their recent protests and strikes are evidence of the cracks in the floor beneath Uber. Uber drivers have finally begun to speak out against the company that lies to them and the public. Uber makes false promises to its drivers and lulls the public into a false sense of security in the use of its service. Uber wants to have its cake and eat it too. They want to completely control their drivers, but keep them classified as independent contractors. This is so because if the Uber driver were classified as an employee, then Uber’s business model would be completely upended. Lawsuits against Uber have been filed all around the country, but the most prominent is one pending in Federal Court in San Francisco. Drivers there are claiming benefits under the Fair Labor Standards Act, which only applies to employees and not independent contractors. Whether the Uber drivers will ultimately prevail in the lawsuit is irrelevant because the reality is that Uber is likely to settle this case in the end. This is what will happen because Uber cannot afford to have an adverse ruling from the Courts that would threaten its muti- billion-dollar venture.
By all definitions and in all reality, under New York law, Uber drivers are employees and are entitled to certain protections, but this would be the death knell to Uber, so in the meantime Uber will continue to churn its PR machine (via a former political strategist best known as the campaign manager for President Obama's 2008 presidential campaign) and will continue to pay its lobbyists for access to politicians who now favor Uber (after the political contribution is made) all with the intent on neutralizing the threat that Uber drivers currently pose to its business. Politicians are pro-Uber because they do not want to be seen as anti innovation, anti-competition and/or against technological advances. What these politicians should be focusing on is simple. They have been charged with protecting the health, safety and welfare of its citizens. Despite their clear obligation, New York politicians all have made it clear that Uber is here and it is here to stay. The playing field is not level and the politicians in NYC have completely abandoned the traditional car services that have served the local communities of the 5 boroughs of New York for decades. These mom and pop shops will soon be gone just like the bodegas of the past. Barnes and Nobel is in and the little bookstore in the neighborhood is gone. Or just like in the move “You’ve Got Mail……. Tom Hanks’ Fox Books and his chain of "mega" bookstores is in and the independent bookstore run by Meg Ryan, The Shop Around The Corner, is out.
The yellow cabs may have become what they are today (run down second class vehicles with a second class service for hire) because the City of New York and the cab owners always held a monopoly over these medallions. At their height, before Uber, the cost of a medallion (the plate attached to the hood of each yellow cab is NYC) was north of one million dollars. Today that number is significantly less, all to the dismay of the banks that lent monies to the medallion owners with the belief that the monopoly they held over the economy that required on demand transportation would continue to be in their pockets forever. Some say that the medallion owners and the banks that lent them money deserve it because the advent of Uber made these cab owners come to the harsh realization that they are no longer needed, or not needed nearly as much as they were before and they should have used technology to their own advantage before Uber was born. Well, the yellow cabs are a day late and a dollar short. That train already left the station. Yellow cabs are in short supply and always will be, but the need for them is decreasing every day. This is not only bad for the for-hire vehicle industry, but bad for the City of New York as a whole, as it is the City that reaps the financial benefits of selling each one of these medallions. The NYC political machine may not care right now because it is still sexy to support Uber. But when Uber shows its true colors and completely upends an industry that has provided safe and reliable transportation to generations of New Yorkers and millions of visitors, what will the politicians do then?
Make no mistake, Uber and its founders are true geniuses, but lets not be foolish to think that they are operating as a not for profit organization to create jobs and better the economy. As soon as Uber makes its next big move, we will all have to take a bite out of reality and deal with the disaster that lies in its wake. I have my opinions about what that next move may be, but use your imagination and come to your own conclusions. Either way, some disruption caused by Uber to the for-hire vehicle industry was for the better, but remember the old adage about the law….it should remain stable, but not stand still. I believe the same holds true for the for-hire vehicle industry. Change over the past few years has been good, but the politicians (who are usually lawyers) that enable Uber to operate unimpeded and even encourage their disruptive conduct, should keep the legal adage in mind. The for-hire vehicle industry should not stay idle and must change with the times, but if things keep going the way they have been of recent, we may all find ourselves with an inferior for-hire transportation industry in New York City……and then who will the politicians blame?
Uber is NOT creating Jobs- do the Math
Based on Uber’s “job creation” projections for update New York, $80 million in revenue will be brought in and 13,000 jobs created. Do the math, that is $6,153 for each driver before paying for gas, insurance and wear and tear on the vehicle. This is NOT creating jobs! $6,153 pay be extra income for someone who wants to supplement their income for and already has an existing job. This is not even part time job wages when you consider how much time this theoretical driver must work to earn the $61,53. This is called job destruction, all at the hands of Uber. The 13,000 people who will supplement their income with an additional $6,153 (before expenses) will have eliminated thousands of full time jobs for drivers who are actually professional drivers who do this for a living and not as a hobby. This is not job creation in my book, but a cute spin that Uber has placed on their actions in an attempt to get the public and the media to buy their bad bill of goods.