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Uber Accused of Saving $500 Million a Year by Cheating Drivers

Joel Rosenblatt
Lyft Inc. and Uber Technologies Inc. logos are seen on the windshield of a vehicle in New York, U.S., on Thursday, Aug. 9, 2018. New York's city council dealt a political blow to Uber Technologies Inc. and other app-based car-for-hire companies by approving a one-year industry wide cap on new licenses and giving the city Taxi & Limousine Commission authority to set minimum pay standards for drivers. Photographer: John Taggart/Bloomberg

Uber Technologies Inc. may be saving more than $500 million a year by misclassifying its California drivers as independent contractors, according to a lawsuit that claims the ride-hailing company is flouting a ruling by the state’s highest court.

Uber avoids paying an average of $9.07 an hour in expenses and benefits that it would incur if drivers were properly treated as employees, according to the complaint filed in federal court in San Francisco. In other words, if they got minimum wage, overtime, meal and rest breaks, workers’ compensation and unemployment and health insurance, as well as Social Security and Medicare benefits.

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The case was brought by a car delivery service that alleges Uber uses its illegal labor savings to price rides below their true cost, allowing it to take business and market share from competitors that compensate drivers as employees. The complaint cites an April ruling by the California Supreme Court that set a tougher threshold for companies to classify workers as independent contractors.

A spokesman for Uber didn’t immediately respond to an emailed request for comment on the lawsuit sent outside regular business hours.

The case is Diva Limousine v. Uber Technologies Inc., 18-cv-05546, U.S. District Court, Northern District of California (San Francisco).

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