Antitrust Class Action Accuses Uber, Lyft of Vertical Price Fixing, Driver Misclassification

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Uber and Lyft face a proposed class action over their alleged practice of increasing customer prices while suppressing driver pay. 

The 33-page lawsuit alleges the companies' control of the majority of the rideshare industry amounts to an unlawful “duopoly” in violation of California antitrust and consumer protection statutes. 

According to the filing, Uber and Lyft have been able to maintain their duopoly—wherein two entities dominate the market for a particular commodity or service—in part by misclassifying drivers as independent contractors, rather than bona fide employees, while depriving the workers of the independence to set their own prices for rides. When a driver commits to providing a ride for either Uber or Lyft, the individual does not know what price the company will charge the passenger, the case relays. 

By preventing drivers from having autonomy over how much rides cost, Uber and Lyft have harmed competition in both the labor and consumer markets, as customers pay more and drivers earn less, the lawsuit says. 

Moreover, the complaint alleges Uber and Lyft have each adopted other non-price restraints designed to limit the competition between the two companies with respect to driver compensation and working conditions. One practice, the case says, is to keep driver compensation so low on a per-ride basis that the workers “have no choice but to participate in game-like compensation packages” that offer premium pay if, for instance, a driver can complete a certain number of trips with a particular period of time, such as a weekend. 

“These practices are designed to make it harder for Uber and Lyft drivers, nominally independent contractors, to switch between ride-haling platforms based on which would pay them more,” the suit relays. 

The case goes on to allege that Uber and Lyft have built their business models on classifying their drivers as independent contractors as a means to avoid providing the workers a broad range of benefits and paying taxes to the government, such as unemployment insurance premiums, minimum wage and payroll taxes. 

Essentially, the suit argues that Uber and Lyft cannot set the prices their drivers charge for rides while depriving them of the protections afforded to properly classified employees. 

“To defend this suit, they cannot take a contrary position that drivers are employees without admitting to liability for withholding wages and benefits to millions of workers,” the complaint reads, contending that California’s Prop 22, even if the measure is found to be constitutional, “also does not protect Uber and Lyft from the claims alleged here.” 

“Nothing in Prop 22 immunizes Defendants from California law prohibiting unfair competition and unlawful and fraudulent business practices,” the case scathes. 

According to the complaint, Uber and Lyft are either employers responsible to their employees under the applicable labor laws or bound by the laws that prohibit corporations from fixing prices and engaging in other conduct that restrains fair competition. 

As they’ve opted to classify drivers as independent contractors rather than in-house employees, Uber and Lyft “now must lie in the bed they have made,” the filing says. 

The plaintiffs aim to permanently enjoin Uber and Lyft from fixing the prices for their rideshare services, withholding fare and destination data from drivers when presenting them with rides and imposing other non-price restraints on the workers. 

The lawsuit looks to cover all individuals living in California who have driven for Lyft and/or Uber in the state within the last four years and who have opted out of the companies’ respective arbitration agreements. 

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