Uber's Law-Breaking: A Story Of Corporate Misdeeds

Uber has been involved in a multitude of legal controversies since its launch in 2010. The company has been accused of operating in a “pirate-ship mentality”, with a willingness to break the rules as a core competitive advantage. Uber's ascent to the largest rideshare company in the world was fueled by a recurring cycle in which it ignored state and local laws, entrenched itself in communities, and then used its influence to change the laws or pay small fines. This strategy has led to numerous legal battles and controversies, including disputes over the classification of its drivers, self-driving car technology, sexual assault concerns, and issues with local regulations. Uber's approach to regulation has been described as guerilla tactics, and the company has been accused of engaging in rampant corruption and lawlessness.

Ignoring laws and regulations

Uber's ascent to the largest ridesharing company in the world has been fuelled by a recurring cycle of ignoring laws and regulations. The company has blatantly disregarded state and local laws, entrenched itself in communities, and then attempted to change the laws it was breaking or pay minor fines to continue operating as usual. For example, in 2016, the state of Pennsylvania fined Uber $11.4 million for operating without permission. Rather than complying with the law, Uber lobbied local officials to reduce the fine and continued its operations.

Uber's disregard for regulations has been well-documented, with researcher Rick Claypool noting that the company often launches in cities while conflicting with local officials' interpretations of regulations. When faced with resistance from law enforcement, Uber mobilises public support and engages in political battles to change the laws to its favour. This pattern has played out in cities across the globe, including London, where Transport for London removed Uber's licence in 2017 due to failings in reporting serious criminal offences and conducting background checks on drivers. Uber was also temporarily suspended in 2018 due to a local taxi firm's lawsuit and had its licence revoked again in 2019 over passenger safety concerns.

Uber's stance on regulations extends beyond local laws. In 2019, the company clashed with California regulators over testing self-driving vehicles without obtaining the necessary permits. Uber argued that its self-driving cars did not meet California's definition of autonomous vehicles and did not require a permit. This incident reflects Uber's broader belief that current regulations are outdated and harmful to its business model.

Uber's willingness to break the rules has been attributed to its "pirate-ship mentality" and the company's libertarian ideals. Travis Kalanick, Uber's former CEO, has been a vocal critic of government intervention, drawing comparisons between Uber and the "jitney" businesses of the early 20th century, which were regulated out of existence. This anti-regulatory stance has led to an escalating series of controversies and legal battles for Uber, including allegations of stealing self-driving car technology from Google, sexual harassment, and a secret program to foil local law enforcement.

Uber's approach to regulations and its disregard for laws and regulations have had significant consequences, impacting public safety, labour rights, and the company's public image.

Lobbying to change laws

Uber has been known to break laws and then use its influence to change them. In 2016, the state of Pennsylvania fined Uber $11.4 million for operating in the state without permission. Uber then deputized the mayor of Pittsburgh, where it was seeking to start a driverless car program, to lobby the state to reduce its fine.

Uber has also been known to lobby local governments to change laws that it breaks. In a 2016 paper called "Disrupting Democracy: How Uber Deploys Corporate Power to Overwhelm and Undermine Local Government", researcher Rick Claypool documents how Uber overran or ignored regulations in nine cities across the US and then changed the laws with its high-powered lobbyists. Claypool writes:

> There is a pattern to Uber’s conflicts with cities. The company often launches in cities in conflict with local officials' interpretations of local regulations, while at the same time insisting on the legality of its business. When local law enforcement and other officials respond, the company mobilizes a campaign to 'save Uber'. Uber usually wins these battles against rules and regulations the company opposes, but when it loses, it keeps fighting. When cities pass laws that Uber opposes, the company commonly seeks to have them preempted with Uber-approved state law or repealed through voter referenda.

Uber, along with Lyft, has more lobbyists than Amazon, Microsoft, and Walmart combined. In 2018, a report from the National Employment Law Project and the Partnership for Working Families detailed the companies' strategy for preventing regulation concerning worker and consumer safety, which the report calls "barge in, buy, bully, and bamboozle". As part of this strategy, Uber and Lyft flood a city with their new service, often by initially offering very low prices and credits for referrals. Thus, city residents quickly grow to depend on the service and become regular customers. In both Philadelphia and Miami-Dade County, this has meant operating in violation of existing regulations. Rather than letting regulation stop them, Uber and Lyft offered to pay all the fines for their drivers, treating violating regulations as the cost of doing business.

The next step in the strategy is to "buy influence" by flooding local and state decision-makers with lobbyists. In Portland, for instance, Uber and Lyft had 16 lobbyists work with city officials, which represented 30% of all lobbying activity in the city in 2015. In New York State, Uber reportedly spent the most of any lobbying group during 2017. This has led to results, with Uber showing up with the legislation it wanted and the legislature enacting it in multiple states, including Oregon, Ohio, and Washington.

Uber and Lyft also often "bully" governments by threatening to leave cities if they do not get their preferred regulatory or legislative outcomes. In Texas, Uber and Lyft employed this tactic in a number of major cities after regulations were imposed.

Finally, Uber "bamboozles" its customers by using its app to communicate with them about impending regulatory changes. The company offers easy ways to contact city officials in order to "save" Uber because the "future of ridesharing is on the line" when regulations are about to be imposed. The company also uses "robo-calls, direct emails, tweets, multiple forms of advertising (trucks, television, utility poles), and even door-hangers" to get its message out.

All of these tactics have caused local and state officials to give in to the demands of rideshare companies, whether or not it best serves their citizens. While most of these tactics are fully legal, Uber and Lyft's lobbying has led to the erosion of "democratic governance" and has limited "the ability of local government to meet the unique transportation needs of residents".

Mishandling sexual assault concerns

Uber has faced a growing number of allegations and civil lawsuits from passengers who claim that they were sexually assaulted by their Uber drivers. The lawsuits allege that Uber is liable for these assaults because it failed to properly screen its drivers. As of November 2024, there were over 1,400 plaintiffs across 29 states, and this number is expected to grow to the thousands.

The plaintiffs in these lawsuits argue that Uber has the capacity to make rides safer but has been slow and inadequate in its response. They criticise Uber for substandard background checks and for failing to remove drivers after allegations of sexual assault. They suggest that Uber could implement measures such as fingerprint background checks and dashcam recordings of every ride to make the platform safer.

Uber has introduced several in-app safety features, such as a 9-1-1 button and a way for friends or family members to monitor rides in real time. It has also started testing video recording during rides in select cities, allowing drivers to use front-facing cameras to record their trips. However, some argue that these safety measures are too little, too late.

Uber has tried to prevent the consolidation of these cases, arguing that it "did not owe a duty to [the] Plaintiff to protect against the criminal conduct" and that these lawsuits "have little in common." However, a panel of judges has ruled that about 80 of the cases can be joined together in federal court, marking a legal victory for the victims.

Violating privacy and community guidelines

Uber's ascent to the largest rideshare company in the world was fuelled by a recurring cycle of ignoring laws and local regulations. The company has been fined for operating in certain states without permission and has been criticised for its response to laws it opposes. For example, Uber pledged $90 million to try to reverse AB5, a law passed in California that would require the company to classify its drivers as "employees".

Uber has also faced significant criticism and legal consequences for violating privacy laws. The company has been accused of developing a tool called "God View", which allows the tracking of all Uber customers in real time. This tool has been used to track the location data of specific journalists and celebrities, which has resulted in public outcry and legal repercussions. In one instance, Uber senior executives examined the travel records of reporters who might write critically about the company. Uber has also experienced multiple data breaches, with hackers gaining access to sensitive data, including Social Security numbers, Tax Identification numbers, and internal databases. As a result of these privacy violations, Uber has faced settlements and penalties, including a $148 million settlement with the Federal Trade Commission in 2018.

Uber's Community Guidelines were developed to foster safe, respectful, and positive interactions within its diverse community. The guidelines apply to everyone who uses Uber's Marketplace Platform, including drivers, riders, delivery people, Uber Eats users, and businesses. The guidelines emphasise the importance of treating everyone with respect, helping to keep one another safe, and following the law. Examples of violations include physical contact, threatening behaviour, discrimination, drug and alcohol use, and sexual misconduct. Failing to follow the Community Guidelines can result in the loss of access to Uber accounts and the Uber Marketplace Platform.

Misclassifying drivers as independent contractors

Uber's designation of its drivers as independent contractors has been a highly contentious issue, with the company facing several lawsuits and arbitrations regarding the employment status of its drivers. This misclassification has allegedly been used as a tactic by Uber to avoid providing its drivers with benefits and protections such as minimum wage, overtime pay, health care, and reimbursement for working expenses.

The debate surrounding the employment status of Uber drivers centres on the interpretation of the Fair Labor Standards Act (FLSA) and the economic reality test. The economic reality test considers six factors to determine whether a worker is an employee or an independent contractor:

• The worker's opportunity for profit or loss based on their managerial skill
• The level of investment made by the worker and the employer
• The permanence of the working relationship
• The nature and degree of control
• Whether the work performed is integral to the employer's business
• The amount of skill and initiative required on the part of the worker

Uber has argued that its drivers are independent contractors because they can choose their working hours, use their own vehicles, and employ "driving strategies" to maximise profits. However, critics argue that Uber exerts significant control over its drivers by setting ride fares, providing behavioural guidelines, and implementing rating systems.

The debate over the employment status of Uber drivers has led to legal battles in multiple states, including California, Massachusetts, New Jersey, and New York. In California, Uber failed to overturn Assembly Bill No. 5 (AB5), which created the ABC test to delineate independent contractors from employees. As ride-hailing drivers were not exempted from the provisions of AB5, they became classified as "employees" under California law. In response, Uber successfully lobbied for Proposition 22 (Prop. 22), a ballot initiative that designated ride-hailing drivers in California as independent contractors, allowing Uber to bypass AB5.

In Massachusetts, Uber and Lyft faced a lawsuit from the former Attorney General Maura Healey, which sought to force the companies to classify their workers as employees under Massachusetts Wage and Hour Laws. This multi-year litigation was resolved in a historic settlement in June 2024, with Uber and Lyft agreeing to pay their drivers a minimum wage of $32.50 per hour, along with other employment benefits.

In New Jersey, an audit by the Department of Labor and Workforce Development found that Uber and Rasier LLC had improperly classified hundreds of thousands of drivers as independent contractors, depriving them of crucial benefits such as unemployment, temporary disability, and family leave insurance. As a result, the companies submitted a $100 million payment to the state's Unemployment Trust Fund.

The issue of worker misclassification is not unique to Uber and has caught the attention of the Obama Administration and the U.S. Department of Labor (DOL). Companies that misclassify their employees run the risk of lawsuits from aggrieved workers and enforcement actions brought by the DOL.

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