SAN FRANCISCO (CN) - Uber and Lyft must face trials on class action claims that they deprive their drivers of employee protections, two federal judges ruled Wednesday.
At issue is the ride-sharing services' classifying their drivers as independent contractors rather than as employees. Drivers in both cases argued that they should have employee status and protections, such as minimum wage and reimbursement for expenses.
Uber argued that "it is not a 'transportation company,' but instead is a pure 'technology company' that merely generates 'leads' for its transportation providers through its software," U.S. District Judge Edward Chen wrote. He found that Uber tried to pass itself off as "merely a technological intermediary between potential riders and potential drivers."
However, "This argument is fatally flawed in numerous respects," Chen wrote. "Uber does not simply sell software; it sells rides.
"Uber is no more a 'technology company' than Yellow Cab is a 'technology company' because it uses CB radios to dispatch taxi cabs, John Deere is a 'technology company' because it uses computers and robots to manufacture lawn mowers, or Domino Sugar is a 'technology company' because it uses modern irrigation techniques to grow its sugar cane."
Chen also dismissed Uber's argument that its drivers do not provide the company a service and are therefore not employees.
"It is obvious drivers perform a service for Uber because Uber simply would not be a viable business entity without its drivers," Chen wrote.
Judge Vince Chhabria struck down similar arguments from Lyft, whose claim that it operates as "an uninterested bystander of sorts, merely furnishing a platform that allows drivers and riders to connect" he called "obviously wrong."
"Lyft concerns itself with far more than simply connecting random users on its platform," Chhabria wrote. "It markets itself to customers as an on-demand ride service, and it actively seeks out those customers."
Both judges cited other evidence characterizing the relationship between the services and their drivers as employer-employee relationships: for example, the companies exercise control over fares, and furnish their drivers with documents similar to employee handbooks, for violations of which drivers have been fired.
Neither judge thought the argument would be resolved until the case went before a jury.
"Rarely does any one factor dictate the determination of whether a relationship is one of employment or independent contract," Chen wrote.
"Here, numerous factors point in opposing directions."
Chhabria said that the jury "will be handed a square peg and asked to choose between two round holes."
"The test the California courts have developed over the 20th century for classifying workers isn't very helpful in addressing this 21st century problem," Chhabria wrote.