| SAN FRANCISCO
SAN FRANCISCO A U.S. judge appeared skeptical on
Friday about Uber's bid for a quick pretrial ruling that its
drivers are contractors and not employees, a critical question
facing Silicon Valley's sharing economy.
App-based ride service Uber, and smaller rival Lyft, face
separate lawsuits seeking class action status in San Francisco
federal court, brought on behalf of drivers who contend they are
employees and entitled to reimbursement for expenses, including
gas and vehicle maintenance. The drivers currently pay those
A ruling against either company could significantly raise
their costs beyond the lawsuit's scope and force them to pay
social security, workers' compensation and unemployment
insurance. That could affect the valuations for other startups
that rely on large networks of individuals to provide rides,
clean houses and other services.
At a court hearing on Friday, U.S. District Judge Edward
Chen said Uber's bid for a pretrial ruling its drivers are
contractors is a "tough argument" to make, given that the
drivers serve Uber's business goals.
"The idea that Uber is simply a software platform, a service
provider and nothing else, I don't find that a very persuasive
argument," Chen said.
Ultimately, a jury might have to decide the issue, he added.
The hearing came a day after a similar one involving Lyft.
In that case, U.S. District Judge Vincent Chhabria said whether
drivers are employees or contractors is "very difficult" to
decide, but that California law appears to favor the drivers.
Chhabria has not yet ruled.
Uber has raised more than $4 billion from prominent venture
capital firms such as Benchmark and Google Ventures, valuing the
company at $40 billion and making it the most valuable U.S.
startup. Lyft has raised $331 million from Andreessen Horowitz,
Founders Fund and other investors.
The drivers have not yet specified how much money they are
seeking in damages.
Drivers argue they should be considered employees because
Uber and Lyft can hire and fire them and require them to accept
a certain percentage of rides, and to pass background checks.
Uber and Lyft counter that drivers control their own
schedules, are not assigned a territory, and are not supplied
with any equipment apart from an iPhone and a sign.