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Ride-Share Companies Hit With Lawsuits From Their Drivers

| September 5, 2013
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Ride-share company Lyft is the subject of a class action complaint. (Photo courtesy of Lyft).

Ride-share company Lyft is the subject of a class-action complaint. (Photo courtesy of Lyft)

Pink-mustachioed ride-share firm Lyft is facing a federal class-action lawsuit from drivers who say they’re being misclassified as independent contractors and that the company improperly takes a cut of the “gratuity” passengers give drivers. Lyft is the second of the new wave ride-sharing services to face a class-action suit. Last month, a suit was filed against Uber, targeting the company’s policy on tips.

Lyft, Uber, Sidecar and other ride-share services argue that, unlike traditional cab companies with an employed labor force, their only products are apps, and their only function is to connect drivers to passengers. Drivers provide their own cars and gas, and their own insurance policies (though the ride-share services provide additional coverage for excess liability).

In its story on the Lyft lawsuit, filed in federal court in San Francisco, SF Weekly reports that plaintiffs argue drivers are company employees and should be protected by the California Labor Code. The story continues:

[The suit says] Lyft should be prohibited from skimming 20 percent from drivers’ gratuities, and it should provide wage statements that accurately reflect the number of hours that each driver worked. It should also reimburse drivers for mileage…

The suit demands $4.5 million in classwide damages, based on calculations that most drivers average $15 per tip, and Lyft filches 20 percent of that.

The plaintiffs and their S.F.-based lawyer, Matthew Carlson, are also seeking an estimated $2 million in derelict wage statements, and $4.5 million in mileage costs for the 1.5 million Lyft rides that have occurred so far.

Lyft described the legal action against the company as “without merit.” Uber dismissed the suit it’s facing as “frivolous.”

The ride-share industry has exploded in the last year. Uber alone now operates in 40 cities across the country. It recently raised $258 million in funding from Google Ventures and TPG Capital, valuing the company at $3.5 billion. It also hired away high-profile executives from Google, Facebook and Klout.

The California Public Utilities Commission proposed a set of rules for ride-share companies—insurance requirements, driver background checks and drug tests, among other proposals.. The CPUC also put ride-share companies under a new legal label: transportation network companies, or TNCs—not taxis. It is scheduled to vote on the proposal Sept. 19.

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Category: Transportation

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  • Brett Taylor

    did these drivers sign w2 documents, provide proof of citizenship, get benefits, work at least 30 hours per week? i don’t agree pilfering the drivers tips, but it seems would be hard pressed to claim they are fulltime employees. i suspect the lawsuits are about the fact that google if one of their funders with 258million so now lawyers want money in it.

    • Geotron Von Doja

      an astute observation lol

    • km2012

      Also I don’t agree with tipping “just because”. It’s not something you are entitled to.

      • Geotron Von Doja

        I have never in my life tipped a cab driver $15, either. If Lyft drivers are “averaging” $15 tips on top of their meter charge, they should drop the lawsuit and stop complaining.

        • http://thetenssf.tumblr.com thetens

          There is no meter charge. The “tips” are the fare.

          • Geotron Von Doja

            Well that just sucks then. Author of the article should have delved further into the payment structure for both rider and driver and explained as much.

            BTW: Do you even Lyft, bro?!? (Lol, jk).

    • http://www.cafepress.com/thebikestop Roy Crisman

      The “tips” are the fares.

  • Alex

    This article doesn’t explain at all how Lyft pays its drivers (or contractors or whatever they want to call them) at all. They’re currently guaranteed a base salary per hour, presumably to build up a reliable network of drivers since demand is still being built. The “tips” referred to here are actually the ride fares. The industry avoids being called a taxi (and skirts their regulations) by calling fares “tips”. So no, nobody is being given a $15 tip in the traditional sense, but rather the fare is on average $15.

    Too bad the reporter didn’t feel it was necessary to explain any of this.

    • LyftUser

      They aren’t just *called* tips. You are under no obligation to pay them… The check/balance is that you can rate your drivers but they also can rate you as a passenger. So if you don’t pay repeatedly you’ll get called out for it and not picked up again.

    • casualmannequin

      You are completely incorrect. There is no base pay. Every single dollar you make on Lyft is a “donation.” Of those donations, Lyft takes 20%. That is it. There is a suggested amount to donate for each driver, but even when the passenger goes beyond that amount, Lyft takes 20%. That is called a tip.

      • S

        Some of the new locations pay their drivers a base rate because their new passenger markets are still growing and are not as busy at the San Francisco market.

        • casualmannequin

          Well that sounds awfully like employment to me.

          • Matthew von Manahan

            They pay a base/floor or 80 percent of donations whichever is higher

      • LYFTDRIVERUSA

        FALSE – Lyft drivers get 15$ an hour during off peak times and $20 an hour during peak times… OR 80% of the donations that hour, which ever is greater. Once business is producing more than that on its own, the hourly guarantee goes away. It is meant to have drivers available to build the market in that area/city. However, Lyft tells employees it is illegal to take a cash tip – which it is not, simply because they want them to force the increase “tip” into the donation on the app which increases their fee. So the ride amount is $30.00, you get 80% of that. But then, the passenger tips you $5.00 and bumps it up on he app bringing the total charged on the app to $35.00, Lyft now takes 20% of that new total. No bueno – that tip belongs directly to the driver and any reasonable person would agree. In fact, the passenger THINK the tip goes directly to the drivers… so we have been telling them NOT to tip since we wont see it and we get the base rate anyway….maybe this way Lyft will figure it out and give tips directly to us.

  • Aaron

    So I’m a cab user. I lived in NY and loved the service there. I lived in Honolulu and laughed at the funkiness, but at least they were on time. San Francisco, however, with the constantly texting drivers and their inability to understand how to use the light on top of their car, has never had a truly functional cab service until the likes of Uber and Lyft. And between the two, I’ve chosen Lyft. I love it. I used it this morning.

    The Lyft donation model really resonates with me, as I once owned completely donations-based art gallery. You know that people are paying not because they have to, but because they want to. It’s wonderful

    I’ve used Lyft for several months now and have methodically asked each and every driver about their experiences – they all cite it as an amazing way to meet people and get to know their city, and to help pay for their car at the same time. They say it’s something they do after their Job to get out and be social. It’s all based on tips – the drivers don’t make any kind of a wage – but they do pay a fee to use the service.

    People have to remember that Lyft’s customers are the drivers, not the people riding in the car, and that % is for the drivers to use the platform.

    I’m interested in why exactly the plaintiff is suing the company. A customer suing the software company they’re paying for not calling them an employee? Sounds a bit like someone suing Ebay for not paying them to sell stuff online.

    Good luck Lyft!

  • Dave Sutton

    Lyft’s whole business is based on dissembling. It calls itself a
    “ridesharing” company—though everyone knows it’s a taxi company. It says
    payment is voluntary, when everyone knows it isn’t (not if you want to
    keep riding).

    It makes sense that Lyft calls its fares “tips.” They b.s. about everything
    else. This way fares can be categorized as “voluntary donations.” As in: “Hey,
    here’s my credit card. Tap it for 15 bucks because it’s been great meeting you!”

    This lawsuit could put Lyft in the weird position of having to prove that
    when it says “tips” it doesn’t really mean tips.

    • Matthew von Manahan

      Wut. Sounds like this is written by bitter cab driver

      • Insurance inforcement

        Wut. you sound like another parasite lyft driver!

        • Matthew von Manahan

          “Enforcement”

  • E. Mac

    They are called “donations”. Tax write offs?

  • Travis Bickle

    Next we need to find out how the court feels about the tax payers paying when the Lyft drivers get injured. The self employment argument is gonna get blown up like it did for the taxi industry 30 years ago.
    The real problem is that CPUC had a total free market POV and the Taxi industry is heavily regulated because deregulation just has not worked anywhere it has been tried.

  • Junior

    IMHO the “tips” versus “fare” discussion seems to largely semantic and seems similar to massage therapists asking for “donations” instead of a fee. As several commenters have pointed out, whether your call it a tip, a fare, a wage, or whatever it’s what the driver gets for his or her time and effort and the real issue seems to be whether Lyft is giving its drivers a fair shake (no pun intended). But the interesting thing is that many drivers and customers are happy with Lyft and Uber–much more so than with taxis.

  • Dean Clark

    Is this for real, I tried to look up S.F.-based lawyer, Matthew Carlson? I could not find him anywhere online as a lawyer in San Francisco. This sounds like just media play to tarnish the ride shares.

    • Fred

      If you follow the link in the article the full text of the suit is there with the address of Matthew.

    • Michael

      Hi Dean

      I think you and I are on the same track here. I sure would like to find legal guidance about my experience with Sidecar. Keep me posted if you come across this Mathew guy :)

  • Insurance inforcement

    All you Lyft, SideCare, and UberX drivers are liars! You all know that your Insurance companies do not know how you are using your vehicles! As (commercial vehicles) (for hire) (on demand) (conveying the public) (for profit). If your insurance companies found out what you are doing they would cancel you policies immediately. We have in fact been logging plate numbers and reporting your activities to the insurance companies. To date 423 policies of lyft, SideCar, and UberX have canceled!

    • Ilya Yankov

      These companies (Lyft, Uber) keep copies of all their driver’s personal car insurance policies. It is in insurance companies interests to sue Lyft and Uber and subpoena this information.