Uber faces court fight over drivers' employment rights

Jul 20, 2016

Drivers launch legal battle against ride-sharing app company after company settles lawsuit in California

Fayez Nureldine/AFP/Getty Images

Uber's legal fight to define itself as a technology, rather than a taxi, company has arrived in the UK.

The GMB union is backing two Uber drivers in a tribunal test case, Sky News reports. Both argue they should be offered employment rights such as sick pay, holiday allowance and a guaranteed minimum wage.

Lawyers for the union are also pursuing allegations that drivers' pay is routinely docked.

The GMB said the two cases would have a material impact on 17 other claims brought against Uber and could have wider implications for its 30,000-strong workforce in London.

It added the suits are the first time Uber will have to defend itself in the UK over its classification of drivers as self-employed contractors - a touchstone issue for the company and the subject of numerous claims around the world.

Uber has expanded rapidly to become the largest ever venture-backed company, worth £50bn and active in 70 countries.

It provides a technology platform, the Uber app, which it says allows individuals to earn money flexibly as drivers.

But it maintains that those drivers are independent and that it is not like its taxi rivals, such as black cabs in London.

This is critical to it being able to circumvent regulation applying to taxi firms and companies in general, which in turn is why the service is so cheap.

Earlier this year, to avoid a critical judgement that could have set a worrying precedent, Uber agreed to pay $84m (£64m), potentially rising to $100m (£76m), to settle a class action suit affecting 350,000 drivers in California.

The issue remains unresolved, however, after a judge refused to back the settlement until Uber and lawyers acting on behalf of the drivers explain how they calculated the damages figure.

In a new ruling, the judge ordered that the parties must present the "factual basis" for the figures, which will be used to establish the damages due to each driver with a valid claim, and to explain why drivers dropped so far from an original demand of $1bn (£760m).

Uber gets £2.4bn from Saudi fund in transport 'arms race'

20 July

Uber has set a new record for a single fundraising round by a venture capital-backed company, thanks in part to a huge $3.5bn (£2.4bn) investment from a Saudi Arabian state-controlled fund.

In total, the ride-hailing giant secured $5bn (£3.5bn) in new financing to fuel further expansion, including in Saudi Arabia itself and the wider Middle East. It plans to invest around $250m (£170m) to roll out its services beyond the 15 cities in the region where it already operates, says the Wall Street Journal.

Uber launched in the Saudi capital Riyadh two years ago and has grown its customer base rapidly, especially among women, who account for 80 per cent of its rides in a country where only men are allowed to drive, notes the BBC. Across the Middle East as a whole, it now has more than 19,000 drivers and 395,000 passengers, several times the numbers of just a year ago.

The fundraising beat the previous highest for a venture-backed firm of $4.8bn (£3.1bn), which was secured earlier this year by Ant Financial, an affiliate of Chinese e-commerce giant Alibaba. It values Uber at $68bn (£47bn), in excess of 50 per cent more than the market capitalisation of General Motors, the largest car manufacturer in the US.

It reflects what the Journal describes as "an arms race over the future of transportation that is attracting the world's largest technology companies and auto makers".

Ride-sharing and car-pooling apps are threatening traditional taxi services in cities all over the world and the sector is attracting a growing army of entrants, including Google. Both Uber and Google, along with Apple and others, are also competing in a race to make self-driving cars a reality.

In the past month alone, Toyota disclosed an investment in Uber, Apple ploughed $1bn (£700m) into Uber's China rival, Didi Chuxing, and Volkswagen invested $300m (£208) in Tel Aviv-based taxi-hailing app Gett, the Journal records. "Earlier this year, General Motors said it invested in Lyft and together they plan to test a fleet of self-driving electric taxis beginning next year."

The Saudi investment came from its Public Investment Fund, set up to invest the kingdom's oil wealth into projects to develop the country and to diversify its financial future.

Uber joins Tesla and Google in self-driving race

20 MAY

The taxi hailing firm Uber has confirmed it is testing driverless cars in the US after announcing a Ford Fusion fitted with an array of sensors will take to the streets of Pittsburgh.

Joining the race for driverless technology, the Uber's Fusion will be used for "collecting mapping data", alongside tests of the vehicle's autonomous driving capabilities. Developed by Uber's Advanced Technology Centre, the car has radars and laser scanners, as well as high resolution cameras – all three working to map the road environment.

The ride hailing company joins a growing list of tech firms and carmakers developing autonomous technology, such as Google and Tesla. The Ford Fusion used by Uber is a car Ford itself is using for its self-driving tech programme.

Uber is also a member of a newly formed lobbying group, consisting of firms with self-driving ambitions which hope to steer lawmakers towards making self-driving cars a reality.

The company is framing its venture into the technology as part of a safety drive. Uber says that driverless cars "have the potential to save millions of lives and improve quality of life for people around the world". The firm envisages a future in which the tech will mean "less congestion, more affordable and accessible transportation, and far fewer lives lost in car accidents". It says its mission is to make transportation as reliable and accessible as running water.

Others have highlighted one or two potential ulterior motives though. BBC technology reporter Dave Lee says that "Uber's ultimate goal is a complete end to car ownership – and it's wasting no time". The company wants its driverless cars to be on demand and with waiting times of less than five minutes, something it's already achieving with human driven cars in many major cities.

The Mail highlights another big and potentially thorny issue – driverless tech would inevitably put the company's drivers out of work.

As a result, The Verge says that Uber, with its "iron grip on the US's for-hire vehicle market", is best positioned to profit from the introduction of self-driving cars.

Uber faces threat from Google car-sharing app

17 May

Uber has had a hugely disruptive effect on traditional taxi markets wherever it has launched, but now it might be about to experience life on the other side of the fence.

Once little more than a tiny tech upstart, the American car-hailing giant is now the established incumbent in a booming sector that is attracting a range of innovative competitors. Most worryingly for Uber, Google, one of its biggest backers and one of the world's technology giants, could be preparing to launch a rival service.

The Wall Street Journal reports that Alphabet, Google's parent company, has announced it is ramping up a pilot programme designed to "allow several thousand San Francisco-area workers to hitch rides to or from work [with its] popular Waze navigation app".

"Riders will pay drivers 54 cents a mile, and Alphabet won't take a cut during the pilot," the paper explains. The Waze Rider app began testing in Tel Aviv, Israel, last summer and now thousands of people use the app across the country, with the company taking a 15 per cent commission on each ride.

An Alphabet spokeswoman played down the trial, saying the company is simply gauging users' interest. She also said that unlike Uber or Lyft, drivers won't be able to make a living off Waze Rider because they are limited to two rides a day to and from work, and are paired with only one rider, with whom they have to share "near identical commutes".

But the rolling out of a cheap and easy ride-sharing option by Google, which has huge reach through its Android platform, could represent a serious threat to Uber. The two companies have previously been "allies", with a $250m (£173m) Google Ventures investment in 2013 presaging the inclusion of Uber ride prompts in Google's own maps app.

Google is not the only threat to Uber's dominance. Last week Apple announced it was investing $1bn (£692m) in the Chinese ride-sharing firm Didi Chuxing, the market leader in China, while General Motors invested $500m (£346m) in Uber's rival Lyft in the US.

Settlement

There is more bad news for Uber today. The company faces the prospect of a $100m (£69m) settlement with drivers relating to a class action lawsuit in the US.

The drivers allege they have been mistreated by being classified as freelancers instead of employees – and that they are therefore entitled to substantial backdated expenses, as well as ongoing holiday and sick pay.

An unfavourable ruling that sets a legal precedent could completely undermine the company's business model, effectively classifying it as a taxi company rather than a technology company that simply takes a fee for connecting self-employed drivers with customers.

Uber had agreed a provisional deal that would see it pay $84m (£58m) potentially rising later to $100m (£69m) to the drivers while continuing to treat them as contractors. Now the driver who originally brought the claim, Douglas O'Connor, has spoken out against the settlement and his original legal counsel, who he says obtained agreement "under false pretences, duress, and misinformation".

It is unclear if O'Connor is considered the class representative for the claim, but if so the development could force Uber to up its offer or risk losing a damaging legal ruling further down the line. The Guardian says new court filings indicate the car-hailing giant may have to cover far larger "reimbursements" of as much as $825m (£589m).

Uber pays $10m to settle second legal action over driver claims

08 April

Uber has settled a legal action brought by San Francisco and Los Angeles prosecutors over its now-discredited safety claims, taking the total cost of the dispute to potentially more than $50m (£35.5m).

The company had been sued in 2014, along with main US rival Lyft, over advertising claims that its vetting process for drivers was "better than systems traditional minicab firms used", says the BBC. Californian authorities asserted this was misleading and specifically that Uber drivers were not subjected to fingerprint checks in the same way as other taxi drivers.

While not admitting to any wrongdoing, Uber has agreed to hand over $10m (£10m). It will pay another $15m (£10.6m) if it fails to keep to the terms of the settlement, which include the company moderating the language used on safety issues.

Uber pointed out it had already agreed to most of these terms when it settled a previous class action lawsuit brought by customers earlier this year, which cost the firm $28m (£19.8m).

The company agreed to drop claims it offered "gold standard" checks and was the "safest ride on the road", as well as to rename its "safe-ride fee" of $1 in the US as a "booking fee", notes the Financial Times.

"Accidents and incidents do happen," the company said in a statement on Thursday. "That's why we need to ensure that the language used to describe safety at Uber is clear and precise."

Uber has had publicity problems related to high-profile crimes committed by its registered drivers in recent years. The BBC notes prosecutors said 25 people with criminal convictions had been approved to drive for the company, "including several sex offenders and a convicted murderer".

High-profile cases involving Uber have included a driver in India who was jailed for life for raping a passenger and a man accused of murdering six people and injuring two others in Kalamazoo, Michigan, during the course of which he is said to have taken on passengers. 

Uber losing $1bn a year in China

19 February

Uber is losing more than $1bn (£699m) a year in China as it fights a price war with local rival Didi Kuaidi.

The US ride-hailing app says it is yet to make a profit in mainland China because of increasingly bitter competition. "We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share," said Uber chief executive Travis Kalanick. "I wish the world wasn't that way."

The US car-hire service launched in China in 2014, where it competes against the country's largest taxi app Didi Kuaidi. Both firms are believed to have invested heavily to subsidize fares in the hunt for market share, betting on China's internet-linked transport market becoming the world's largest.

However, Didi Kuaidi said Uber's claims about its spending were untrue and that it is simply benefiting from its larger size. "Smaller competitors have to bleed subsidies to make up for their insufficient driver and rider network," a spokesman told Reuters.

Last month, Kalanick said spending on pricing strategies was "how you win" in China and that his company aimed to beat Didi Kuaidi through deploying the spending more efficiently.

"I prefer building rather than fundraising," he told BetaKit. "But if I don't participate in the fundraising bonanza, I'll get squeezed out by others buying market share."

Uber currently operates in more than 40 Chinese cities and plans to be in 100 by the end of the year. In 2015, Didi Kuaidi invested $100m in Lyft, a rival, which operates only in the United States.

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They are annoyed because Uber actually offers value.

1. Uber is much cheaper - An UberX from Shoreditch to Putney cost me £22 in a nice clean Toyota Prius. The same journey in a black cab would cost around £35, and you would have to stand out in the cold to grab one.

2. You can request a quote upfront, and they are almost always accurate.

Im a complete convert. I never use a black cab if I can help it.

I use uber from Putney to Camden
what I like is the choice of classy vehicles. The price is less than black cabs and the drivers are smartly dressed. The knowledge is nice to have, however, its not necessary these days with technology. Iget to know the vehicle and a picture of the driver and car registration. As a women passenger I find this reassuring.

Uber can surge charge, raise their fares at any time due to busy times or bad weather be carefully also drivers are rude and unprofessional.
I would always use black taxi

And here I thought the French were total pussies.

The knowledge is useful, if you are going to or from an awkward location there can be a lot of problems with Uber because the driver's have no clue where they're going. For value and ease though there's no contest. I would love to support black cabs but they are not good value for money. Black cabs need to evolve rather than strike...why can't they just adopt the same technology? It's 2014 you can't expect people to walk around in the cold and then pay £50 to get home. If the prices were close I would use Black cabs, but they aren't even in the same league. Come on guys...

Evolve rather than strike - yes this is exactly right. Because soon it's going to be evolve or die.

When companies such as Uber transition to real time taxi sharing, and make their proposition even better value for money, taxis are going to be left in the cold.