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Uber

New Law Makes Uber and Lyft Drivers Official Employees with Company Benefits

September 27, 2019 by Levinson and Stefani Leave a Comment

A new law in California could transform companies like Uber and Lyft by classifying their drivers as employees rather than independent contractors.

This month, California Governor Gavin Newsom signed new legislation stating that many “gig economy workers,” like those of the rideshare apps, would now be reclassified as employees–an update that will most likely completely change the business models of tech companies such as these.

Regarding the bill signing, Newsom called it a “landmark legislation for workers and our economy.” It is  clear the bill will have a tremendous impact–especially when more than 1% of the United States workforce drive with Uber and Lyft.

The new law is set to go into effect in January, and will allow drivers to work as official employees, making available to them benefits including minimum wage, unemployment and disability insurance, as well as union rights.

Newsom wrote in his letter to California lawmakers that the bill is an “important step” toward fighting against the “hollowing out of our middle class.” He also says reclassifying contractors will create a significant rise in income equality for the middle class.

Drivers often choose the rideshare driving lifestyle because of its flexibility; however, independent work includes challenges–such as higher levels of stress regarding earnings stability, insurance protections, and the ability to have your voice heard by the companies that hired them.

Additionally, in the case of Lyft and Uber driver-related accidents, lines around coverage have been blurry, as it is often unclear whose insurance policy would apply–the at-fault driver’s or the company’s? Generally, when an innocent passenger or other driver is hurt, financial responsibility comes from the driver at fault and their personal insurance. 

This can create difficulty, especially if the driver happens not to have a policy with enough to cover initial hospital bills. Becoming an employee of the company would deem the company itself liable for covering the costs.

However, Lyft and Uber have been lobbying against the measure.

In an open forum for the San Francisco Chronicle, Dara Khorsrowshahi, chief executive of Uber Technologies, along with Logan Green and John Zimmer, co-founders of Lyft, plead against the reclassification, saying it would “pose a risk to [their] businesses.”

“First, most drivers prefer freedom and flexibility to the forced schedules and rigid hourly shifts of traditional employment,” they said. “Second, many drivers are supplementing income from other work.”

Their argument is that this kind of flexibility for drivers would become impossible under regulations of becoming official employees of their respective companies.

Even after the bill was passed on September 11th, Uber stated it would still not be classifying its drivers as employees under the new law, saying its “drivers’ work is outside the usual course of Uber’s business.” 

Uber claims this is because its drivers pass the “ABC” test–that they A) are free from control and direction of the company, B) their work falls outside the company’s usual business, and C) they work in an independent business that is of the same kind as the company’s–and therefore can be considered independent contractors. regardless of the new law.

As soon as the bill was expected to push through, Uber said it would be looking into “several legal and political options” to be able to continue classifying drivers as contractors. One of these initiatives includes a statewide ballot initiative, which is planned for next year. 

It is also still unclear how exactly the law will affect Uber, Lyft and their drivers when put into practice. Currently, it includes exemptions for workers who set their own rates and hours, such as hairstylists, freelance writers and real estate agents.

Hundreds of rideshare app drivers are part of the group Gig Workers Rising, which had been protesting throughout California in favor of the bill. The group defines itself as a “campaign supporting and educating app and platform [for] workers who are organizing for better wages, working conditions and jobs,” and is comprised of rideshare drivers, delivery workers and couriers.

“American history is full of shameful examples where powerful industries exploited workers in pursuit of greater profits,” said presidential candidate Elizabeth Warren in an op-ed for the Sacramento Bee. “In many industries today, it takes the form of worker misclassification.”

Other candidates have supported workers’ demands along with the bill, including Kamala Harris, Bernie Sanders, and Pete Buttigieg.

Beware of Uber’s new Terms of Service agreement

January 10, 2017 by Levinson and Stefani Leave a Comment

uber

There’s a good chance you overlooked the fine print. Just before Thanksgiving, Uber, the mega-popular ride-sharing company, was in the process of changing its Terms of Service agreement to include a mandatory arbitration clause, which is now making it much tougher for riders to sue the company in the event of a crash. Now we’re well into January and it’s likely you’ve accepted those terms. That doesn’t mean you shouldn’t know what those terms mean.

From Associate Attorney Brett Manchel:

Can you tell us about Uber’s new Terms of Service and Mandatory Arbitration?

One of the more common elements of a Terms of Service agreement is an arbitration clause, which allows big companies to protect themselves by requiring both parties to work towards a settlement as opposed to going through the motions of a lawsuit. Lawsuits and the costs associated with them can reach upwards of millions of dollars under certain circumstances, so it’s not surprising that a company like Uber would want to take the arbitration route. Many big companies do. But ultimately what they’re doing is depriving people of a fair hearing in front of a jury. That’s inherently unfair to someone who might have been paralyzed as a result of a crash, for example, and who might never have a normal life again. Instead, companies like Uber should do more to prioritize good driving practices instead of passing the buck, so to speak.

So what does Uber’s new Terms of Service agreement mean for riders?

Uber has essentially rolled out an update to its Terms of Service, which includes the mandatory arbitration clause I was just talking about. That puts riders in a serious predicament because they’re effectively giving up their right to sue in court and to bring their case in front of a jury. Basically, Uber is saying if you don’t agree to give up your right to sue us in court, we don’t want you to use our service.

Can they enforce that?

In reality, they’d have a very difficult time. The question we’re getting now is, “What happens if I opt out of mandatory arbitration?” Well, first off, it means you’re most likely protecting your right to sue in court, which is a good thing. At the same time, you’re also taking a stance against a company and its interests. What happens then is anyone’s guess; will Uber lower your rider rating? Will they blacklist you? Will your wait time for a car increase? But the risk that a big company takes action against an individual as some form of retaliation is highly unlikely. It’s not a practical way for people or businesses to go about their time, unless extraordinary circumstances demand it.

Can I opt out?

Riders were given the opportunity to opt out of the new Terms of Service agreement at the end of December. You’ve likely accepted those terms unwittingly since then. If you want to give it a try, you can email optout@uber.com with your name and the Terms of Service you want to opt out of. Or you can send a letter to a registered agent with the same details. What that means is that you’re subject to the old Terms of Service, which does not have an effective mandatory arbitration clause. Instinctively, consumers should always err on the side of opting out of new Terms of Service agreements if they include a mandatory arbitration clause. You never want to give up your right to bring a claim against an entity. Arbitration might be faster, cheaper, but it negates your ability to get a fair hearing if that’s the route you want to take. The bottom line, whether it’s Uber or anyone else, is that you should always be aware of new Terms of Service agreements, as they could end up costing you some of your rights as a consumer.

Brett Manchel is an Associate Attorney at Levinson and Stefani.

Boston inks deal to test self-driving cars. Is Chicago next?

September 14, 2016 by Levinson and Stefani Leave a Comment

Autonomous Vehicles

The folks in Bean-town have peered into their crystal balls and one of the things they’re seeing is self-driving cars. The Boston Globe reported this morning that the city has struck a deal with a group of unnamed tech companies and manufacturers to test autonomous vehicles, beginning in a matter of months. Coincidentally Uber is set to unleash a fleet of autonomous cars (though this particular fleet will include an actual human behind the wheel for safety reasons) on the streets of Pittsburgh later today.

More from the Globe: “If this technology is going to yield benefits for the consumer, we want to make sure it works in the city of Boston,” said Chris Osgood, the city’s chief of streets. “We want to make sure we’re doing our due diligence and understanding what the implications are. How do we set up the right policies and take the right approach to this so it’s going to have the biggest net benefit?”

Counting Pittsburgh, it seems Boston is the second major city in recent months to commit to exploratory testing. Could Chicago be the third? Here are four reasons why it might.

The mayor is a big Uber fan

His brother, Ari, is also a big investor. Back in 2014 reports started swirling that Rahm’s younger brother stood to make nearly a billion dollars from his Hollywood agency’s dealings with the popular ridesharing company, which is venturing into autonomous territory. On top of that, David Plouffe, a strategist to then-Senator Obama’s presidential campaign in 2008 and former White House mainstay, now serves as one of Uber’s most prominent strategic advisors. The mayor has also favored rideshare-friendly legislation that keeps it at a premium in the Windy City (much to the consternation of the highly regulated limousine and cab service industry). Now that Uber has unleashed self-driving cars on the roads of Pittsburgh, it’s easy to imagine the company heading further west to a place that fits its self-driving test criteria and where it’s ostensibly been feeling the love.

Chicago has one of the largest populations in the country

This goes beyond the Uber and ridesharing craze. Chicago is a major city with a major population—nearly 2.7 million people to be more precise. That’s good enough for third on the national charts, behind only Los Angeles and New York. A study in 2015 by Zen99, a resource for folks who depend on 1099s, found that Chicago ranked ninth out of 70 U.S. markets that were favorable for ridesharing users. That’s not counting the untapped potential of autonomous ridesharing either. One could assume that a city that loves alternative modes of public transportation is bound to look closer at the ways self-driving cars impact the broader economy, both commercially and otherwise.

Like a good neighbor, State Farm is here

So is Allstate, based in Northbrook. They’re two of the biggest auto insurance companies in the country and the insurance industry has been wrestling with the notion that self-driving cars may reduce crashes and potentially eliminate them altogether. That poses big questions for State Farm, Allstate, Nationwide, and others, which will soon need to figure out how they’re business plays into the bigger picture. I’m not saying that either will be making a public relations push in favor of self-driving cars, but what better opportunity to do some experimentation while the guinea pig is rummaging around in your own backyard? Let’s assume the worst: self-driving cars get into tons of accidents. Maybe a public relations push on behalf of the insurance companies isn’t so far-fetched after all.

It’s the economy, stupid

The reality is this: Autonomous cars are the future of transportation. It’s not a matter of “if” but “when.” Rahm and others like to refer to Chicago as the Silicon Valley of the Midwest. If we’re to take that declaration at face value, we need to make the most of our opportunities, which could have huge economic benefits. Tech is big business and presenting Chicago as a tech-friendly hub feeds the narrative while drawing new talent to the city. Being labeled as a pioneer of autonomous transportation and the legislation that governs it has the potential to be hugely beneficial in the long run. I can already imagine Tim Cook pulling up to Apple headquarters in the West Loop. In a self-driving car no less.

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