Sharing Economy Reformation? Lyft Settles, Uber to Trial
Globalization of our economy led to the creation of the sharing economy and companies like Lyft and Uber have been the poster child for the sharing economy's grey area. Well this week that grey area received a little contrast as Lyft announced a $12.25 million settlement in a class action employment lawsuit brought by its drivers.
In the same week the Ninth Circuit Court of Appeals denied Uber's motion to stay a trial, essentially forcing Uber to go to court in June over their own massive class action lawsuit.
So what does all this litigation mean? Well with Lyft's settlement, Lyft still will not reclassify their drivers as employees. For drivers who are considered independent contractors, this was not the victory they were looking for. Which is why Uber's case heading to trial this summer is so important.
Also included in Lyft's settlement is an agreement to "make changes in its product and Terms of Service with drivers," according to a company spokesperson. For now Lyft will not reclassify its drivers employees, largely because "80 percent of drivers who use the Lyft platform drive 15 hours per week or less to supplement their incomes."
The settlement with Lyft now over, all eyes turn to Uber and their impending trial. Uber's lead attorney said, "if the cases moves forwards, we'll look forward to presenting the facts about how drivers user Uber with complete flexibility and control over their work to a jury."
Ultimately the cases against Lyft and Uber stem from drivers trying to gain "employment status," which would then require the companies to provide a number of benefits, most notably health insurance.
Fairly new, the sharing economy will most definitely be undergoing reformation and regulation over the coming years. And while it is not entirely clear where litigation with Uber will really mean for the sharing economy as a whole, one thing is for certain: sharing economy companies and sharing economy workers will be watching the Uber case very closely as it plays itself out.