Tuesday, February 9, 2016

Uber and Agency - Is an Uber Driver an Uber Employee?

          Ride sharing programs such as Uber and Lyft not only provide user-friendly transportation services, bottles of water, and mints, they also provide a unique employment opportunity to their drivers.  But the legal status of ride share drivers also presents novel and puzzling legal issues that appellate courts are only recently beginning to address.  When a ride sharing program is sued for the tortious acts of one of its drivers then a central issue is whether the law considers the driver an independent contractor or an employee.  If the former, then the program can potentially face vicarious liability for the driver’s actions.  

          This issue was recently taken up by the United States District Court for the District of Columbia in Search v. Uber Techs., Inc., 2015 U.S. Dist. LEXIS 120456 (D.D.C. 2015).  In an entertaining opinion that even cited to Forrest Gump, the Search Court rejected the argument of Defendant Uber Technologies, Inc. (“Uber”) that its driver, Yohannes Deresse, was an independent contractor when he allegedly became involved in a serious altercation with his unfortunate passenger, Plaintiff Erik Search. 

          The alleged incident occurred on September 8, 2013 when Search, along with several cohorts, used the Uber application to request transportation in the District of Columbia. For those unfamiliar with the Uber app, a user can access it on a mobile phone and request transportation from one location to another. Uber then sends notification of the request to a nearby driver who, in most cases, is driving a personal vehicle.  Uber sets the fee for transportation, and then processes payment of the fee to the driver through a credit card or debit card transaction.  After Search requested his Uber ride on the incident date, Deresse accepted the request and picked up Search and his party. Search alleged in his complaint that at some point during the trip Deresse began acting strangely, leading his friends to get out of the car. Deresse then angrily followed the group, and a verbal dispute turned into a physical altercation in which Deresse allegedly stabbed Search six times.

            Search filed suit against Uber in D.C. Superior Court, alleging, among other claims, that Uber was vicariously liable for Deresse’s actions. Uber removed the case to federal court and moved to dismiss Search’s complaint, arguing, among other things, that it could not be held vicariously liable for Deresse’s actions since he was an independent contractor. 
            In determining whether an employer-employee relationship exists courts in the District of Columbia and in other jurisdictions typically examine multiple factors, including the employer’s (1) involvement in the selection and engagement of the employee; (2) payment of wages; (3) power to discharge; (4) power to control the employee’s conduct; and (5) whether the employee’s work is part of the regular business of the employer. Moorehead v. D.C., 747 A.2d 138, 143 (D.C. 2000); LeGrand v. Insurance Co. of N. Am, 241 A.2d 734, 735 (D.C. 1968). However, as with many things in life, central to the court’s analysis are the issues of power and control, i.e., the employer’s right to control the conduct of its alleged employee. In Search, the Court effectively found that Uber could not have its cake and eat it too, rejecting Uber’s argument that Deresse was an independent contractor in light of the control exercised by Uber over its drivers.  

            In support of its holding, the Court noted that Uber screens its new drivers, dictates the fares charged by them, pays them on a weekly basis, and imposes a number of strict standards of conduct and cleanliness on them. Failure to comply with Uber’s guidelines may result in the driver’s termination. Additionally, the Court pointed to Search’s argument that Uber controlled the rate of refusal of ride requests by drivers, the timeliness of drivers’ responses to the requests, the display of its logo on the drivers’ personal vehicles, the drivers’ interactions with the passengers, including whether the drivers were permitted to accept tips, and monitoring of the driving quality of the drivers. The Court stated that all of these factors went to establish Uber’s control over driver conduct, dispelling Uber’s claim that its drivers were independent contractors. Ultimately, these findings precipitated the Court denying Uber’s motion to dismiss with respect to Search’s claims of respondeat superior, apparent agency, and violation of the D.C. Consumer Protection Act, while granting it with respect to certain other claims.

            The Search holding, along with similar cases that have recently been decided in other jurisdictions, represents the inevitable issues that arise when any company attempts to balance its desire to control its independent contractors while avoiding the vicarious liability that can potentially arise from too much control. While the determination of whether an individual is an independent contractor is by no means an exact science, the Search case demonstrates that the more control a ride share program exercises over its independent contractors, the more responsibility that program has for monitoring their actions given the potential for vicarious liability. It will be interesting to see how courts treat the issue in the future as the employer-employee versus independent contractor analysis is applied to the wave of ride sharing applications sweeping the nation.

            The attorneys at RSR&M are well versed in both Maryland and D.C. case law on the topic of employer liability and agency law, and have ample experience representing corporate and commercial clients in both venues. Please feel free to contact RSR&M if you have any questions.

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