Antitrust Claim Against Uber Illuminates Perilous Intersection

12 April 2016 Publication

Texas Lawyer

Uber recently found itself driving a very narrow road, flanked on the one side by the Scylla of labor-and-employment claims and on the other by the Charybdis of antitrust liability. And the road is narrow because it's the defense to the first type of claim that sets the predicate for the second. To understand why this is, some background to Uber's nature and organization will be helpful.

Uber bills itself as a technology company, not a transportation company. It produces an application for smartphones that connects riders and drivers and also facilitates the payment of fares, which are set according a proprietary algorithm. Uber collects part of each fare as a software licensing fee and remits the remainder to the driver. It steadfastly maintains that the drivers are freelancers, not employees.

But this position has not gone unchallenged. Multiple class actions filed in California on behalf of drivers allege that they are employees, not independent contractors and that they are thus entitled to the full array of benefits and protections afforded under state and federal labor and employments laws, which could include the right to unionize, to collect unemployment benefits, and to receive reimbursements for expenses.

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