Uber and Lyft may have to treat their drivers as employees, judge says

Drivers of ride-hailing services such as Uber and Lyft may have to be treated as employees rather than independent contractors, a federal judge in San Francisco said Friday.

In a class-action lawsuit brought against Uber, drivers for the service challenged Uber’s policy of classifying its drivers as independent contractors unprotected by the California Labor Code. The drivers contend that they’re employees entitled to a minimum wage, reimbursement for expenses, overtime and other benefits.

“The idea that Uber is simply a software platform, I don’t find that a very persuasive argument,” U.S. District Judge Edward Chen said.

Chen commented in court Friday, but has yet to issue a ruling on the case.

Lyft drivers have filed a similar lawsuit, arguing in the complaint that they “are in fact Lyft employees” entitled to similar benefits.

In both lawsuits, the drivers cite many reasons why they should be considered employees: They’re integral to Uber and Lyft’s business, both companies retain the right to terminate drivers at any time, and the companies direct and control their drivers’ work.

Treating drivers as employees could be costly for Uber and Lyft, which consider themselves technology companies instead of transport companies. Unlike taxi or limousine services, neither Uber or Lyft directly employ drivers, nor do they own or maintain the vehicles used as part of their service.

As of December, Uber had more than 160,000 active drivers in 161 cities. Lyft, which operates in more than 60 cities, did not reveal its driver count.

Lyft declined to comment, and Uber did not immediately respond to requests for comment.

The issue of independent contractors being misclassified is not unique to transport network companies such as Uber, Lyft and Sidecar. Just last year, port truckers in Los Angeles went on strike over their status as contractors, while FedEx has faced its drivers in court repeatedly over the last decade over a similar issue.

Twitter: @traceylien

Bloomberg News contributed to this report.