CA: Uber Accused of Saving Millions Due to Misclassifying Drivers

13 Sep, 2018 Liz Carey


San Francisco, CA ( – A California limousine company has filed suit against Uber Technologies alleging the ride-sharing company has unfairly stolen business from its competitors by selling its services at a discount. For more coverage on Uber, click here.

The suit alleges that Uber is able to do this because it under pays wages through misclassification of its drivers. Uber considers its drivers to be independent contractors, the suit says, but should consider its drivers to be employees under California law.

The plaintiff in the suit, Diya Limousine Ltd., filed the suit on Monday in California federal court. Court filings indicate Diya proposes to make the filing a class action suit.

According to court documents, the suit alleges that Uber is able to avoid paying $9.07 an hour in expenses and benefits to the drivers because the company misclassifies the drivers as contractors. That misclassification saves the company about $500 million a year, the lawsuit said, and allows the company to use that savings to undercut prices for the rides it offers, essentially stealing customers from rival companies who are forced to treat drivers as employees.

It’s not the first time Uber has come under fire for its classification of drivers. 

In January, Uber reached a settlement with drivers in New York and agreed to pay $3 million in a proposed class-action lawsuit from drivers who said the company took too many fees out of the fares Uber paid them. Drivers also claimed they were misled and that the company guaranteed $5,000 in compensation the first month of employment. 

In May 2017, also in New York, the company agreed to pay up to $80 million to more than 96,000 drivers after admitting to not paying them enough, according to Reuters.

In July, CNN reported that Uber was under federal investigation for alleged racial and sexual discrimination practices. That investigation is expected to be finalized in November. 

A spokesperson for Uber did not respond to emails requesting comment by press time.

Uber reported earlier this year that for its second quarter, revenues for the company increased by 63 percent over the previous year to $2.8 billion.  

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    About The Author

    • Liz Carey

      Liz Carey has worked as a writer, reporter and editor for nearly 25 years. First, as an investigative reporter for Gannett and later as the Vice President of a local Chamber of Commerce, Carey has covered everything from local government to the statehouse to the aerospace industry. Her work as a reporter, as well as her work in the community, have led her to become an advocate for the working poor, as well as the small business owner.

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