Taxi industry disrupter Uber is flush with cash, but that hasn't stopped it from allegedly claiming 50 percent of the gratuities given to its drivers. Now, as reported by GigaOm and Xconomy, the company is facing legal troubles over the practice, as two drivers in San Francisco have filed suit against it.
This isn't the first time Uber has been in legal hot water over its gratuities policy. Drivers in Massachusetts and Chicago filed similar complaints against Uber earlier this year. This most recent one claims that Uber is violating California's labor law and is breaching contracts.
In earlier defenses of the practice, Uber's CEO Travis Kalanick has said that the fee is like a lead-generation fee. But that might not fly in most states, where it is illegal for employers to take a bite out of tips given to employees. The drivers' cases all hinge on whether or not they are actual employees of Uber, or just independent contractors as the company views them.
The company provided The Verge with a statement on the matter:
The allegations made against our company are entirely without merit and we will defend ourselves vigorously. Uber values its partners above all else and our technology platform has allowed thousands of drivers to generate an independent wage and build their own small businesses on their own time. Frivolous lawsuits like this cost valuable time, money and resources that are better spent making cities more accessible, opening up more possibilities for riders and providing more business for drivers.
Shaking up an entrenched industry isn't easy, but if Uber ever wants to be considered a true successor to the taxi companies, it needs to treat its employees and drivers fairly. Even if the company is victorious in all of these suits, the ill will garnered from them could be enough to prevent drivers from participating in the service — and drivers' participation is crucial to Uber's future success.