Is Uber Stiffing its Drivers on Tips?

Two Michigan drivers filed a lawsuit claiming that Uber misleads passengers by telling them that the fare includes a tip, when that tip doesn't actually get passed onto the driver; it is kept by the company.

by Tresa Baldas, Detroit Free Press / April 14, 2016
Travis Kalanick, Uber CEO flickr/TechCrunch

(TNS) -- Online taxi giant Uber is battling yet another legal headache, this one triggered by two Ann Arbor drivers who are suing over wages and benefits, claiming that Uber is keeping their tips, denying them benefits and forcing them to pay for things like gas and repairs.

The claims aren't novel. Over the last year, Uber drivers in California, New York and Washington state have filed similar class actions against Uber, claiming the company stiffed them out of tips and wages. But the Michigan lawsuit, filed Tuesday in U.S. District Court, comes when the $50-billion company is trying to rebound from a series of costly legal setbacks and public relations fiascoes.

Last week, Uber agreed to pay $10 million to settle allegations by California prosecutors that it misled passengers about the quality of its driver background checks. Two months before that, it agreed to pay $28.5 million to roughly 25 million riders to settle two other lawsuits involving safety claims. Also in February came a public relations nightmare when one of its drivers allegedly shot six people to death in Kalamazoo.

Now come the Ann Arbor plaintiffs, who are claiming deceptive practices by a company that has made it easy for people to hail a cab with the click of their cellular phone. In their lawsuit, the drivers claim that Uber misleads passengers by telling them that the fare includes a tip, when that tip doesn't actually get passed on to the driver but rather is kept by the company.

"One of Uber's key selling points is that passengers do not need to tip their drivers because gratuity is included in the fare. However, Uber drivers are not compensated for gratuities, and Uber specifically instructs its drivers via a training video to refuse a cash gratuity if offered."

The suit also alleges that Uber improperly classifies drivers as independent contractors rather than employees, thus denying them a wide range of benefits covered by federal and state labor laws, including minimum wage, overtime, health insurance and workers compensation. The lawsuit also claims that Uber fails to reimburse drivers for work-related expenses, such as gas and maintenance on their cars.

Uber declined comment on the suit, citing company policy not to comment on pending litigation. But it issued this company statement.

“Nearly 90% of drivers say the main reason they use Uber is because they love being their own boss. As employees, drivers would have set shifts, earn a fixed hourly wage and lose the ability to drive with other ridesharing apps — as well as the personal flexibility they most value.”

The plaintiffs are Artur Zawada and Nashat Farha, both of Ann Arbor. They worked for Uber in 2015, but are no longer employed by the company.

Uber has not yet filed any response to the Michigan suit in federal court, though it has denied similar allegations in California. In that case, the company has argued that its drivers aren’t employees, but instead operate as independent contractors who use their own equipment and set their own hours.

According to the website uberlitigation.com, which details both sides of the California litigation, Uber's position on driver wages and tips is as follows:

"Uber’s position is that drivers who use the app are not Uber’s employees, and that Uber does not control them like an employer would. For example, Uber’s position is that it never sets drivers’ schedules, never requires them to log into the Uber app for any minimum amount of time, never requires them to accept any particular trip request received via the Uber app, never assigns them a geographic territory, never restricts them from engaging in another occupation or business, and never restricts them from simultaneous use of other apps like Lyft and Sidecar."

With regard to the tips claim, Uber’s position is this: "The fare does not include a tip, and Uber has not withheld any tips from drivers."

As for the expense reimbursement claim, Uber’s position is: "Drivers are not Uber’s employees and are not entitled to expense reimbursement under the California Labor Code."

©2016 the Detroit Free Press Distributed by Tribune Content Agency, LLC.

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