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Posts Tagged ‘#Uber’

Waymo v. Uber – Addressing the Stakes of Driverless Car Trade Secrets and Intellectual Property

Posted on: February 12th, 2018

By: Courtney K. Mazzio

The litigation surrounded a man named Anthony Levandowski, a former Waymo employee who took thousands of documents with him when he left Waymo in 2015 to pursue his own company. Uber purchased Levandowski’s company, giving Levandowski the lead role in its efforts to get their self-driving vehicle technology off the ground. At issue in the lawsuit between Uber and Waymo was the lidar laser sensor, which Levandowski had helped develop while at Waymo. In short, this technology measures distance to a target, and so, is used in the control and navigation of self-driving cars. As you might imagine, this technology in the infancy of the driverless car development was a highly coveted piece of intellectual property.

Settlement talks were initially in the billions, but the final figure was 245 million, or 0.34 percent of Uber’s current company valuation. The agreement also includes a provision to insure Waymo’s confidential information is not incorporated into Uber technology.

This settlement not only protects Uber’s driverless car momentum in their race to be the first taxi service to successfully utilize the technology at a relatively cheap price, but also maintains Waymo’s position at the forefront of the self-driving technology. To insure this position enjoys longevity, employees of Waymo can expect they will likely be tightening its control and security over confidential information and property developed within its walls.

If you have any questions or would like some more information, please contact Courtney Mazzio at [email protected].

Self-Driving Cars Will Likely Change the Insurance Landscape

Posted on: September 21st, 2016

By: Melissa Santalone

This week Uber debuts its pilot program for self-driving cars in Pittsburgh.  These lucky Uber users in Pittsburgh will be among the first Americans to come into direct contact with technology that is expected to eventually make its way into our everyday lives.  With the greater implementation of this technology, huge changes are likely to come in the legal and insurance realms and new cyber security concerns will be created.

The increased usage of self-driving cars, while intended to make driving safer, also opens up new opportunities for hackers.  Every car operated by a computer could be at risk of being taken over by hackers or invaded by ransomware or viruses.  This could pose catastrophic consequences for passengers, as well as other vehicles sharing the road.  This is especially true for fleets of vehicles programmed to communicate with each other, a problem which will no doubt be of special interest to Uber.  These new risks create new needs for protection by automakers, fleet operators, and individual vehicle owners.  Insurers will have an opportunity to offer protection from these new risks in the form of additional lines of insurance coverage.

This technology is coming and the inevitable changes it will bring are going to change the auto insurance industry and raise new and serious cyber security concerns.  The time for preparation is now.

The Gig Economy, Uber, and the Future of Worker Classification

Posted on: January 21st, 2016

By: Behnam Salehi and Allison Shrallow

The “gig economy” is a unique business model in which companies connect consumers to various services through internet platforms. Instead of hiring employees to perform the services, most “gig economy” employers hire independent contractors to perform the work.   As independent contractors, they enjoy flexible hours, and the ability to earn money quickly with little to no training time and work for more than one “gig economy” employer at any given time.  This model also appeals to businesses as they benefit from exponential profit growth while avoiding expenses traditionally associated with hiring employees, such as paying insurance premiums and overtime wages, filing payroll taxes and reimbursing workers for employment-related expenses. This model has expanded exponentially in recent years, in both worker participation and corporate growth, and a recent study suggests that nearly one in five adults either derive full or supplemental income through working “gig economy” jobs.

The major source of conflict surrounding the “gig economy” arises from whether “gig economy” workers qualify as independent contractors or employees. Many, if not most, “gig-economy” businesses, like Uber, view themselves as passive platforms that connect consumers with independent contractors to provide services, while maintaining little or no control over the workers.  In contrast, some workers have recently filed lawsuits alleging they are employees of a “gig economy” employer and therefore entitled to certain protections only afforded to employees.  To resolve this dispute, many courts and the U.S. Department of Labor (“DOL”) have used the following Economic Reality Test to determine whether an individual is an independent contractor or employee under the law:

  1. The extent to which the work performed is an integral part of the entity’s business,
  2. The worker’s opportunity for profit or loss depending on his or her skill,
  3. The extent of the relative investments of the employer and the worker,
  4. Whether the work performed requires special skills and initiative,
  5. The permanency of the relationship, and
  6. The degree of control exercised or retained by the employer.

On July 15, 2015, the DOL issued a memorandum expressing the department’s belief that “most workers [classified as independent contractors] are [in fact] employees under the FLSA’s broad definition [of an employee].” Most notably, the DOL expressed that the FLSA, which applies only to employees, applies to workers even if the employer does not exercise the requisite amount of control over the workers as long as they are economically dependent on the employer.

While no one factor in the Economic Realities Test is dispositive, the crux of the analysis seems to focus on factor number six, or the degree of control exercised or retained by the employer, in determining whether an employee-employer relationship exists. As discussed here, as of December 9, 2015, over 160,000 Uber drivers in California are entitled to join a misclassification class action lawsuit scheduled to go to trial in June 2016. While the workers’ ability to work flexible schedules and decide if and when to accept an assignment, weighs in favor of finding them to be independent contractors,  Uber’s right to withhold compensation for route deviations, train employees, and terminate drivers evidences a high degree of control which weighs in favor of finding the drivers to be employees.

While the California Uber drivers’ misclassification lawsuit is pending, other jurisdictions have dealt with this issue.  For example, Florida’s Department of Economic Opportunity found an ex-Uber driver to be an independent contractor holding Uber did not possess the requisite level of control over the worker as well as the performance of the work.   In contrast, however, a California Labor Commissioner of the Division of Labor Standards Enforcement found Uber improperly classified an Uber driver as an independent contractor, reasoning Uber was involved in every aspect of the operation and had the requisite amount of control over the worker to qualify as her employer.

More often than not, California courts set the trend for the rest of the nation’s laws.  Thus, if a California court finds Uber’s workers to be employees, then such a decision would likely affect similar “gig economy” businesses nationwide, which in turn would present economic, regulatory, structural, and financial ramifications for this business model.

A Bumpy Road Ahead: More Uber Drivers to Join Misclassification Class Action Lawsuit

Posted on: December 11th, 2015

By: Allison Shrallow

Living in San Francisco, the mecca of all things tech, can make a person very accustomed to getting everything on-demand. Need groceries? Use Instacart.  Want someone to clean your home? Try Handy.  Looking for a date?  Consider Bumble. The push-button economy has become so commonplace that it is difficult to imagine our lives without it.

Oh but there was a time. For most long-term San Franciscans, the prospect of attempting to hail a cab in 2009 remains in the forefront of their minds.   And then one day a miracle happened.  A little company by the name of Uber came to be.  The idea was simple enough.  Need a ride?  Push a button.  At first Uber only offered Town Cars and was seen as more of a luxury.  However, in an effort to capture more customers, Uber began offering UberX, marketed as a less expensive, more efficient option than taxis.

Uber classified their drivers as independent contractors, granting drivers with the personal flexibility to work when and for as long as they wanted.   As independent contractors, Uber was not required to pay for their drivers’ health insurance, social security, paid sick days or overtime.  Further, Uber was under no obligation to reimburse its employees for mileage and other employment-related expenses.  Uber’s current business model allows drivers to pocket 80% of the fare with the remaining 20% going to the company.   As a result of having very little overhead and expenses, customers receive low fares.

This might all change as a result of a lawsuit filed by three drivers in 2013 alleging Uber misclassified them as independent contractors rather than employees. These drivers sought to represent California Uber drivers in a class action lawsuit against the ride-hailing service.  On September 1, 2015, a court certified a class of all California drivers who have driven for Uber since August 2009 to June 2014, and who did not sign an arbitration agreement.   However, on December 9, 2015, the court expanded the class of drivers to include those who signed Uber’s 2014 and 2015 arbitration agreements, concluding the agreements contained a non-severable Private Attorney General Act waiver that rendered the entire arbitration agreement unenforceable on public policy grounds.  As a result, the majority of Uber’s 160,000 California drivers will be allowed to join the class action lawsuit.  Uber has stated it will file an immediate appeal.

The case is scheduled to go to trial in June of next year. If the court finds Uber misclassified its drivers as independent contractors, Uber could be liable for vehicle-related and phone expenses for all drivers who joined the lawsuit, and,  going forward,  it would be required to pay significant sums on wages, insurance, and reimbursable expenses for its drivers.   It would also most likely create a ripple effect throughout the entire push-button economy, prompting workers at other on-demand app companies to file suit, a move that most likely would require other companies to change their business model to account for the higher cost of doing business.  This in turn would almost certainly result in customers having to pay more for services to which they have grown accustomed and workers losing the flexibility that attracted them to these companies in the first place.

Uber Suffers Another Setback In Defending Classification Of Its Drivers As Independent Contractors

Posted on: June 26th, 2015

By: William H. Buechner, Jr.

Uber, an extraordinarily successful and technology-driven transportation company, has suffered another setback in its attempt to fend off legal challenges to its practice of classifying its drivers as independent contractors rather than employees.  The final outcome of these legal challenges against Uber could have a substantial impact in determining how service workers in technology-driven, on-demand industries are classified.

Uber relies on technological innovation to provide services similar to a taxi service.  Uber utilizes software that customers who need a ride may log into on their smartphone and request a ride.  The Uber application then matches the customer with a Uber driver, who picks up the customer at the designated location and transports the customer to the requested destination.  Uber’s enormous success has been attributable to a large degree to its ability to control labor costs and other business expenses.  Uber has done so by classifying its drivers as independent contractors, which enables Uber to avoid paying payroll taxes, workers’ compensation and unemployment insurance.  By classifying its drivers as independent contractors, Uber also avoids other significant operating expenses, such as mileage.  The appeal for drivers is that they enjoy substantial flexibility in determining when and how much to work and have little or no direct supervision.  In December 2014, Uber reported that it had more than 160,000 drivers in the United States who drive at least four times per month.

Uber’s successful business model, however, may be threatened by drivers challenging their classification as independent contractors.  For example, the California Labor Commissioner issued a ruling earlier this month finding that a Uber driver was misclassified as an independent contractor and instead must be treated as an employee.  The Labor Commissioner emphasized, among other issues, that the drivers are an integral part of Uber’s regular business, which it viewed as a factor weighing heavily in favor of a driver being an employee.  The Labor Commissioner also explained that, by obtaining customers in need of a ride and supplying drivers to provide the rides, Uber retained complete control over the operation as a whole.  In addition, the Labor Commissioner observed that drivers must register their cars (which must not be older than 10 years) with Uber, that the fee paid by passengers is set solely by Uber, that Uber monitors ratings given to drivers by customers, and that Uber terminates drivers if their rating falls below a certain number.  The Labor Commissioner awarded the driver $3,622.08 for mileage and $256.00 for toll charges.  The Labor Commissioner rejected the driver’s claims for additional wages, including overtime wages, but only because the driver failed to present sufficient evidence of the amount she was paid or the number of hours she worked.  Uber quickly appealed the Labor Commissioner’s decision, and that appeal is pending.

The ruling by the California Labor Commissioner follows a ruling adverse to Uber in a federal class action lawsuit in San Francisco.  In March, the federal court denied Uber’s motion for summary judgment, finding that there were fact disputes as to whether Uber’s drivers are properly classified as independent contractors or employees.  Courts have issues similar rulings involving workers in other industries.  For example, the Ninth Circuit ruled last year that drivers for Federal Express are employees rather than independent contractors.

Consequently, employers should not assume that individuals are independent contractors simply because such individuals may retain control over when they work or how much they work, or because they are not subject to direct supervision in a traditional way.   Courts are likely to examine the degree to which an employer controls the manner and means of performance when someone is actually working, and also whether someone is subject to supervision in a less traditional or direct manner utilizing innovative technology.