Uber Is Using Fine Print To Control Its Drivers. But They Might Not Get Away With It.

Harry here.  This week’s top story fits in nicely with the interview we released yesterday with the Uber employee lawsuit attorney, Shannon Liss-Riordan.  

I suspect this is going to be a huge issue for years to come, and the impact will no doubt be felt by more companies than just Uber, so expect a lot of future news stories.

Uber Is Using Fine Print To Control Its Drivers. But They Might Not Get Away With It.
Uber Is Using Fine Print To Control Its Drivers. But They Might Not Get Away With It.

Today, RSG contributor John Ince takes a look at the fine print Uber is using to control its drivers, touches on driverless cars, and discusses the brewing Uber strike.  Let us know what you thought of the top stories this week in the comments below.

Uber Is Using Fine Print To Control Its Drivers. But They Might Not Get Away With It.

Sum and Substance: Disgruntled Uber drivers are taking their beef with the taxi-killing startup to the National Labor Relations Board (NLRB) in hopes of restoring hundreds of thousands of drivers’ ability to participate in suits against the company. The legal team that won class status for a lawsuit against Uber earlier this month are hoping the NLRB will invalidate mandatory binding arbitration clauses in the company’s contracts. When a judge granted the drivers’ request for a class action against the company three weeks ago, he caveated the ruling to limit the number of drivers who could participate. For now, there are tens of thousands of drivers who failed to opt out of language in Uber’s contracts that commits them to resolving disputes in arbitration rather than in court. However, if the NLRB rules that the arbitration clauses are unenforceable, and that ruling percolates into the California court that’s hearing the class action, the California case would expand dramatically. Those arbitration clauses are currently the only thing limiting the scope of the legal jeopardy that Uber faces. If they crumble, the very business model that’s made Uber so famous and so wealthy would be at risk of collapse. In the month since limited class status was granted in the California suit, another putative class-action suit was filed in Pennsylvania, illustrating how the battlefield Uber must defend is expanding rapidly.

My Take: This really is the big story in ridesharing, and it will continue to be adjudicated for months and years ahead.  Right now, only about 15,000 Uber drivers in San Francisco are included in the class action because others failed to opt out of the mandatory arbitration agreement.  As a practical matter, most drivers didn’t even know they opted out.  All they did was quickly tap a screen to get to the app as soon as possible – without even reading it.  Attorney Shannon Liss-Riordan points out that the NLRB has “repeatedly held that these class action waivers are illegal under the National Labor Relations Act.  If that holds here, too, then Uber investors need to beware – the game will have changed in a material way.”

GM warns the Valley: Prepare to compete over driverless cars

Sum and Substance:  Move that tiny self-driving pod out of the way. The 107-year-old automaker told Wall Street analysts Thursday that it intends to be a leader, no matter what, in the form of transportation people pick in the future. GM already has millions of cars on the road that are connected to the Internet, and it has young engineers who are helping to develop new technology that will lead to autonomous driving, said Mark Reuss, GM’s product development chief. “No one has solved all the technical challenges or claimed outright leadership,” he said. “We see this as a tremendous opportunity to lead.” Google has been testing bulbous electric self-driving pods in and around its headquarters in Mountain View, California, denying that it wants to get into the car-building business. Apple has reportedly been testing its own vehicles, too, as have auto parts makers and German and Japanese automakers. High-tech taxi service Uber has a lab in Pittsburgh that’s also working on the technology. Google has a fleet of 48 robot cars that have logged more than 2 million miles on private tracks, highways and city streets.

My Take:  This whole self driving car thing is coming at us a lot faster than most of us would have imagined with a whole host of heavyweights fighting for the big prize.  With this announcement, it signals that GM will soon have a fleet of self-driving gas electric hybrid Chevy Volts shuttling about it new campus – ultimately a $5.5 billion investment.  GM is also launching a car sharing program where almost 500 residents of a luxury apartment complex in New York can reserve SUVs and park them in garages in NYC.  Uber CEO Travis Kalanick, stirred things up when he said the company’s goal is to eliminate private car ownership.  Not so fast Uber.  Sleeping giant GM might have something to say about that first.

Transportation regulators investigate 2 incidents involving Uber drivers

Sum and Substance: Transportation regulators are looking into two incidents involving Uber drivers that have prompted the company’s critics to say, “I told you so.” The Nevada Taxicab Authority investigated a rear-end collision of a car driven by an Uber driver into the back of a Yellow Cab taxi last week. In a separate unrelated incident, Nevada Transportation Authority officers impounded the car of an Uber driver after he allegedly attempted to offer a ride while not on the Uber platform — which not only is illegal, but prevents Uber from getting its cut of the fare. The traffic accident may have been a routine incident had it not been for the actions of the driver after it occurred, but it also called attention to frustrations the public could encounter if a motorist is ever in an accident with a transportation network company driver.

My Take:  Not a whole lot new in this report.  Accidents happen and they probably happen a lot more with the ridehailing app on than is reported by Uber and Lyft.  But what happens if you’re in the car as a passenger when the accident happens?  Well, it opens you up to all kinds of legal complexities, as this passenger learned.  The other takeaway from this story is that a man impersonating an Uber driver was arrested by a Nevada undercover plainclothes police officer for “soliciting” a passenger off app.   It’s unclear from this story whether the arrested was in fact an Uber driver.  Either way, it’s a clear signal that attempting to circumvent protocols can get you in a lot of hot water as a driver.

Uber drivers across country planning to strike

Sum and Substance: Vadafari is one of thousands of Uber drivers across the country who plan to strike come mid-October. They’re demanding fewer drivers, higher rates and an option to tip. According to the group’s Facebook page, they also want to raise the minimum fare and the cancellation rate to $7. Vadafari feels lucky this isn’t his only profession. “It’s hard because if someone is doing this full time, you have to work 60-70 hours to even make $500, $600,” he said. Organizers are calling for Uber drivers not to work for an entire weekend in October, which would cripple an area like Midtown where bar-goers depend on them for late night rides home.

My Take:  Strike organizers are projecting that 10,000 drivers nationwide will not drive for the Oct 16-18 weekend. A recent strike of NYC Uber drivers was successful to the extent that Uber management backed off its plan to require Black Car drivers to pick up UberX passengers.  Seems like we’re entering a phase in the evolution of this industry where drivers are becoming more aware of the need to organize.  In the era of social media, there are many more tools available … and some of those tools are allegedly being co-opted by the ridehail companies themselves.  One fascinating exchange on the SF Uber Driver’s Lounge called out accused “shills” from the company who were posing as drivers and posting pro-company comments and denigrating the plans for drivers to strike.  Just one more battlefield on which this war is being waged.

Has Uber already peaked?

Sum and Substance:  The ride-hailing service Uber is unquestionably one of the defining phenomena of our digital era. But much of the excitement it generates in the investment community comes from the notion that its growth is unstoppable — that sooner or later Uber will, well, reign uber alles. Indications are emerging, however, that Uber’s growth faces some genuine natural limits. That’s the argument being made by Frederick Steier of TheStreet.com and Lawrence Meyers, chief executive of Los Angeles-based PDL Capital, a firm that finances pay day lending, auto title lending, and other specialty loan businesses. Their take is that in New York, Uber and the medallion taxi fleet “may have arrived at a natural equilibrium” (Steier’s words) that will prevent Uber from growing much more in that city. Meyers wrote recently in the New York Observer that, based on Uber’s figures, “the land grab is clearly over. … At this point, Uber drivers are as likely to cannibalize each other than steal taxi medallion market share.”

That’s a finding likely to apply to other communities, and conforms to the anecdotal information I gleaned from Uber drivers in San Francisco and Washington, D.C., this summer: They weren’t making much money, in part because Uber had signed up too many cars to serve a finite demand profitably. One of our drivers had been forced out of the taxi business by competition from Uber drivers, then joined Uber only to find that he was still facing competition from Uber drivers.

My Take: Interesting to get this perspective.  It most assuredly conflicts with what Uber is telling potential investors.  Only one view here can be right.  I guess we’ll find out soon enough.

What did you guys think about the week’s top stories?  What do you think about the Uber strike and the Uber employee lawsuit?

-John @ RSG