Is Uber Violating Federal Antitrust Laws?

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By Ceylan Pumphrey, Esq. on May 23, 2019 11:00 AM

From lawsuits determining whether or not drivers can bring class actions, to drivers [allegedly] behaving badly, Uber seems to be in the legal news a lot these days. But, what seems to dominate the news cycle is the argument over whether Uber drivers are employees or independent contractors. And, most recently, this has been put into the context of whether or not Uber is violating federal antitrust laws.

What's Uber Doing to Possibly Violate Federal Antitrust Laws?

The purpose of antitrust and trade regulation law is to protect commerce and trade from monopolies, unfair restraints, and price fixing. Price fixing occurs when companies artificially dictate prices, instead of allowing consumers and the market to determine prices through supply and demand, and that's the one that Uber may be violating, according to an article in Jalopnik.

Uber has contended time and time again that its drivers are independent contractors and not employees. Furthermore, Uber has argued that its drivers are its customers because the company is selling "an exchange service" to allow drivers to find their customers. According to Jalopnik, by determining the price of ride, which is supposedly between its customer (the driver) and their customer (the rider), an argument could be made that it's engaging in price fixing.

Employee vs. Independent Contractor

Of course, the argument that Uber may be engaging in price fixing probably wouldn't hold water if the drivers were designated as employees. After all, a company is permitted to set the price that its employees may charge customers. But, by useing employees rather than independent contractors, Uber would be opening themselves up to many other costs and issues.

For example, if the drivers were classified as employees, Uber would be required to provide them with benefits. Although benefits can include a variety of things, such as vacation time and matching 401ks, it would at minimum mean providing health insurance. Additionally, Uber would have to pay a variety of taxes for each worker, including unemployment taxes, social security tax, and workers' compensation/disability premiums into a state insurance fund.

Given the certainty of the costs it would incur by reclassifying its drivers as employees, and the uncertainty that Uber will be charged with price fixing, it's unlikely that the company will change its hiring process anytime soon.

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