Lawsuit alleges Uber unfairly withholds tips from drivers

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A class action lawsuit filed against Uber, a tech-based service that connects riders to drivers and has filled San Francisco streets with sleek black town cars, alleges that the company is cheating its drivers out of tips.

The suit also charges that drivers have been misclassified as independent contractors under California law.

Uber’s website tells customers there is “no need to tip,” and drivers are prohibited from accepting any extra cash. The complaint alleges that “drivers do not receive the tips that are customary in the car service industry and that they would otherwise receive were it not for Uber’s communication to customers that they do not need to tip.”

The lawsuit was filed in San Francisco's Northern District on Aug. 16. Attorney Shannon Liss-Riordan, of the Boston-based firm Lichten & Liss-Riordan, believes that by withholding tips “Uber is artificially trying to make the total price look lower – and in doing so, they’re hurting the drivers.”

Douglas O’Connor, who is named as a plaintiff in the lawsuit, said that when he started working as an Uber driver in San Francisco about 10 months ago, he was told not to accept tips because they were included in the service fees automatically charged to customers’ credit cards. But there's nothing in his paycheck to indicate whether he has received a gratuity or for what amount, O’Connor said.

“For some of the drivers there has been a line item, but that line item that’s called the gratuity has not gone to the drivers,” Liss-Riordan explained. In those cases, it appears Uber takes half, she said. And in cases like O’Connor’s, “There is no separate gratuity that’s going to the drivers,” Liss-Riordan said, so the representation that any tip was included in the first place is “a lie.”

Liss-Riordan noted that Uber has even been known to send out “secret shoppers” who are directed to take Uber, offer cash tips, and report whether the drivers accepted the tips or declined with the explanation that the tips are included in the service fee, as they are instructed to.

Meanwhile, Uber recently required drivers to agree to revised contract terms, which is mandatory in order to continue their relationship with the ridesharing company. Buried in the fine print is an arbitration clause with a class action waiver. By agreeing to these terms – something Uber not only requires but makes exceptionally easy with the tap of a button on a smartphone – drivers are essentially giving up their rights to join a class action suit against the company. O'Connor noted that the contracts were sent out in English only, but English is not the first language of many Uber drivers.

“In order to opt out of this class action they have to send a hand-delivered letter to the general counsel of Uber in San Francisco,” Liss-Riordan pointed out. “We’re also trying to get the word out to Uber drivers that if they want to participate in this class action case and potentially recover their tips, they actually have to opt out of this arbitration clause.”

O’Connor said he drives between 30 and 70 hours a week, and would like to continue doing so in the long run. But without the additional income he feels he could be earning in tips, “I’m not going to be able to do it. It’s just so expensive to live in the San Francisco Bay Area.” He described what happened when a businessman he’d ferried to the airport offered to add an additional $10 to $15 onto his company credit card for exceptional customer service. He couldn't, because Uber does not provide a mechanism for attaching an additional driver bonus onto the service fee. 

Asked if there was an estimate as to how much drivers could be losing in tips, Liss-Riordan said, “It adds up to a lot – for someone working there for over a year, you could be talking in the hundreds if not thousands of dollars.” And for the entire class of Uber drivers, who are estimated to number in the thousands across major U.S. cities, she noted that the total damages sought could end up being in the millions.

In addition to charging that Uber is “unjustly enriching” itself by collecting fees that are owed to drivers, the suit also claims that Uber drivers should be classified as employees under California law.  

“Under California law, there’s a multi-factor test to determine whether someone is an employee or an independent contractor and the test looks at things like … whether the workers’ services form the core part of what the business does,” Liss-Riordan explained. In this case, they do, she added: “If there were no drivers, there would be no Uber.”

As independent contractors, Uber drivers must pay for their own gas expenses and vehicle maintenance. They are not eligible for workers compensation or unemployment benefits in the event that they are terminated. Nor is Uber required to make any contributions toward its San Francisco drivers’ health care costs, since its drivers aren't considered employees. The San Francisco Health Care Security Ordinance mandates that employers contribute toward healthcare for any employee working eight hours or more.

Liss-Riordan specializes in representing tipped employees. She prevailed in a lawsuit against American Airlines on behalf of skycaps who were prevented from receiving tips because the airline created a $2 fee for curbside check-in that led passengers to believe that gratuity was included.

Reached via email, Uber spokesperson Andrew Noyes declined to answer questions about the allegations raised in the complaint, nor would he explain why Uber required its drivers to agree to an arbitration clause waiving their rights to join a class action suit. Noyes declined to comment, saying the complaint had not yet been formally served.

O’Connor, meanwhile, said he agreed to be named as a plaintiff in the case “in order to improve working conditions for myself and my colleagues.” Asked if he was concerned whether this decision would affect his standing as an Uber driver, O’Connor shrugged it off. “I’m probably not going to get the employee driver of the month award,” he joked.

Comments

restaurants that customers do not need to tip and that, instead, menu prices are set 15% higher.

No worker is legally entitled to any tip, if for no other reason than that it is always discretionary. Bad service = bad tip or no tip.

Most occupations do not have tips anyway. You don't see Safeway checkout girls demanding the right to be tipped.

A better solution would be to do away with tipping altogether, and move to the European and Australian model.

Posted by Guest on Aug. 20, 2013 @ 12:58 pm

The truth and a sense of proportion are casualties of that war.

They prefer an over-regulated bad service to an appropriately-regulated good service, and that tells you everything you need to know.

Posted by anon on Aug. 20, 2013 @ 1:30 pm

Anon, you deserve a Reward for the Use of the Term "Shareable Economy" in A Context Farthest Possible Removed From the Original Intended Meaning...

http://static.quickmeme.com/media/social/qm.gif

Posted by laughtiger on Aug. 21, 2013 @ 1:37 pm

fact remains that AirBnB and Uber are at the vanguard of the new internet and smart phone enabled shared economy.

Trouble keeping up?

Posted by Guest on Aug. 21, 2013 @ 1:45 pm

No "sharing" involved in the sublet economy of AirBnb -- Uber is itself just a dispatch service for limos and taxis (some regulated, some deregulated).

Neither of these are actually p2p models, in fact the lawsuit this article is about in fact shows how Uber exercises control over the actions of both drivers and passengers in a way that makes this anything but a peer to peer interaction.

"Smartphone enabled" -- that much is correct. The rest is nothing but spin, the subversion of more dangerous (=politically radical) ideas (sharing, p2p) by making them into nothing but branding for what boil down to the same old economic practices, mainstream corporate capitalism.

Posted by laughtiger on Aug. 22, 2013 @ 1:30 am

business away from over-centralized, over-regulated large sclerotic business model and instead empower more independent workers and clients with an easy and instant means of contacting each other.

So if I want to book a car or a stay, I don't have to use some monolithic bureaucracy but rather can seamlessly contact the person who can provide that opportunity.

That is why the shared economy is proving to be so successful, and the odd lawsuit here and there from some struggling vested interests won't change a movement that ahs it's nexus firmly by, with and for the people.

Posted by anon on Aug. 22, 2013 @ 6:26 am

SFBG is simply reporting on a story. The over-regulators in this article are the head honchos at Uber who are regulating that drivers cannot accept tips, even going so far as to send out secret shoppers to trap drivers who might accept one.

Why not let the drivers accept tips? Who does it hurt? Uber will get better drivers, the drivers make more money, and give better service which attracts more customers. It's a win-win

Posted by Guest on Aug. 27, 2013 @ 5:55 pm

employees to accept tips or not.

That's not a decision for anyone other than who pays the wages.

Posted by Guest on Aug. 27, 2013 @ 6:50 pm

an employer. You fans of these gypsy cab smartphone applications keep insisting that Uber, Lyft et al. aren't employers and that the drivers are contractors.

So either Uber is the employer and the drivers are its employees or the passengers are the employer and the contracted drivers are their employees.

Which is it? You can't have it both ways and switch the scenario around depending on what is most favorable to Uber.

Posted by Guest on Aug. 27, 2013 @ 7:33 pm

Very true! Except that all drivers that work on behalf of Uber are considered independent contracotrs BY Uber! Therefore, it is up to the driver and the client as to weather a tip is accepted or not. Otherwise, the driver is an EMPLOYEE of Uber, something that Uber denies!!!

Posted by Guest on Mar. 05, 2014 @ 4:38 pm

Don't tip, but instead pay them a living wage (and don't misclassify them as an independent contractor when they're actually employees in every way), give them benefits, free medical care, guaranteed retirement pay, guaranteed vacation time, sick leave, and job security.

You're right. That would be better.

In the meantime, Mr. Pink, just pay the damn tip.

Posted by Greg on Aug. 20, 2013 @ 10:13 pm

personally I'd like the scene in the Soprano's where the waiter whines about his tip and gets a spanking for his trouble.

Posted by Guest on Aug. 21, 2013 @ 6:06 am

Uber has been representing itself as a "gratuity included" service but has not been passing that on to the customers. Hence the suit!

Posted by laughtiger on Aug. 21, 2013 @ 1:31 pm

"customers" -- I meant drivers. Uber tells customers it is collecting a gratuity, but then keeps that for itself. They also do this with the taxi service, keeping a portion of the "tip" added to the meter price.

Posted by laughtiger on Aug. 21, 2013 @ 1:33 pm

worker? It's simply a supplement for the convenience and efficiency of Uber over some cab that you have to try and find on the streets.

Call it a convenience fee if it makes you happier.

Posted by Guest on Aug. 21, 2013 @ 1:43 pm

the issue is that uber prohibit the drivers to accept tips from generous and satisfied clients that freely want to exercise the right to share.

Posted by Guest on Aug. 23, 2013 @ 9:22 am

the issue is that uber prohibit the drivers to accept tips from generous and satisfied clients that freely want to exercise the right to share.

Posted by Guest on Aug. 23, 2013 @ 9:23 am

Try tipping a FedEx employee or a WalMart employee. They won't accept it, unless they are crooked.

Posted by Guest on Aug. 23, 2013 @ 12:08 pm

Wut? Fed-ex? Y would u tip FedEx? Y wouldn't fedex alllow tip?

Posted by Guest on Sep. 05, 2013 @ 2:29 pm

So it's no big deal if other drivers do not either. It's all down to company policy.

Posted by Guest on Sep. 05, 2013 @ 2:42 pm

Tips are expected in the service industry if you go to a restaurant and you are being tend to and served you should leave a tip in the service is good are go eat at a self serving buffet. If you don't believe a driver deserve a tip then drive your own car to where you choose to go are get a rental it's quite simple.

Posted by Guest on Oct. 30, 2013 @ 9:56 pm

I've tried tipping them and not one of their drivers has ever accepted it.

If you want tips, go and work for an employer who allows them. Simple.

Posted by Guest on Aug. 20, 2013 @ 1:00 pm

Who gave anyone the right to restrict working people from making money?

Posted by Guest on Aug. 20, 2013 @ 2:28 pm

workers cannot accept tips. That applies to all government workers, for instance. That's called bribery.

Posted by Guest on Aug. 20, 2013 @ 2:50 pm

Pls bribe your driver.

Posted by Guest on Sep. 05, 2013 @ 2:30 pm

Remember that many company have "mystery shoppers" and "mystery customers" who test the staff's adherence to company policy.

Posted by Guest on Sep. 05, 2013 @ 2:43 pm

Did SFBG go to war with ATMs when they first came out...??

Posted by Guest on Aug. 20, 2013 @ 2:51 pm

they would have opposed ATM's, at least if they had perceived that it would lead to the layoffs of thousands of unionized bank tellers.

They probably would also have opposed the automobile on the grounds that it put blacksmiths out of a job.

Posted by Guest on Aug. 20, 2013 @ 3:07 pm

Why don't you work without benefits, insurance and retirement without tips and tell us how much you like it

Posted by Guest Driver on Aug. 20, 2013 @ 3:30 pm
Posted by Guest on Aug. 20, 2013 @ 4:04 pm

How many customers of Uber tip outside of Uber ?

Posted by Guest Activist on Aug. 20, 2013 @ 4:56 pm

At Safeways? None.

In a restaurant? Depends if it is an upper class joint or a Burger King. Or whether a service charge is applied.

In a bar? Probably.

At Macy's? Nope.

Posted by Guest on Aug. 20, 2013 @ 5:26 pm

in fact during a market research test when clients outside of Uber were not allowed to tip on the credit card system, they asked how do I add a tip?

Posted by Guest Pro Driver on Aug. 20, 2013 @ 10:39 pm

them to do so, and where the policy bans tipping.

I'm very comfortable with top tipping if that's the norm and the policy somewhere. In fact, I prefer it.

Posted by Guest on Aug. 21, 2013 @ 6:07 am

Meet the new boss, same as the old boss.

Turns out, when it comes to screwing the workers this whole revolutionary shareable economy is just the same old shit.

Bring it on.

Posted by pete moss on Aug. 21, 2013 @ 5:25 am

drivers are rated...given gold stars based on their performance.1-5.
like some 3rd grade reward system. got rent?
99% of the clients/passengers are of the latest transplants displacing those who have made and contribute to this city.
they're making ...i dunno 200 thousand dollars a year.
share the wealth...or just keep pissing off the guys and gals who shave your neck and wipe your arse.
uber provides a greta service for little money in return.
uber...the mcdonald's of transportation.
dont tip anybody.
go on a killing spree.

Posted by Guest alles on Aug. 21, 2013 @ 12:15 pm

I think the old school cabbie way of doing business (phone call for a pick up - you have no idea if they'll show up) is becoming extinct.

Let's be clear - this movement was brought on by cab drivers who thought they could charge sky high meter rates (believe 2nd highest in the country) and continue to provide crappy service ("is that a credit card?").

Cabbies thought they had a monopoly. But unlike City employees, who rob City residents by charging a fortune for shit services, they enjoy no such monopoly.

Posted by Guest on Aug. 23, 2013 @ 9:55 am
Posted by Guest on Aug. 23, 2013 @ 12:12 pm

"shared" economy nonsense, don't you?

Speaking of tips, here's one for you. Preserve your anonymity. When the pitchfork and torch brigades appear, they'll want to know who you are.

Posted by Guest on Aug. 23, 2013 @ 12:16 pm

enabled peer-to-peer dis-intermediated business exchanges and so I feel sure it's readers here are comfortable with the phrase.

Oh, and we're all anonymous here and so, come the revolution, I will just dig out my old Che T-shirt, a bandana, and I'll be off to the socialist races.

Posted by Guest on Aug. 23, 2013 @ 12:46 pm

UBER can make its life easier by saying "tips are optional" instead of being creative in taking drivers' tips they get by providing service. I think its a selfish act on the part of UBER operating business in such fashion.

Posted by Guest on Sep. 15, 2013 @ 6:15 pm

You don't have to tip, and shouldn't if the service is crap.

But if Uber allowed tips, there would be pressure to always tip, just as in restaurants, rather than as it should be - only tip for excellent service that goes beyond the normal duties.

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Posted by totoro onesie on Dec. 16, 2013 @ 5:55 pm

Many restaurants post at the entrance "Parties of 6 or more: 15% Gratuity added to check" I have to assume that the server(s) will get !00% of the tip. I was an assistant manager at a chain restaurant, and if I waited on a table, I kept the tip, with the blessings of the franchise owner. I have been a professional driver for more than 30 years, and when I delivered a script to a semi-famous actress, she blessed me with a $10 tip. I have been an independent contractor, and I have been a misclassified IC that the company was forced to convert into an employee. One of the main considerations to being an IC is that one is free to work for more than one company. An IC must perform in a manner acceptable to the company hiring him, do the work in a manner acceptable to the company and not try to steal the company's clients by offering them an inducement to switch to the IC. If a client offers me a tip for exceptional service, I will accept it because I have earned it. There is no reason to withhold a tip from someone that deserves it, unless it is a government employee or a typically untipped FedEx or UPS driver. They will sometimes get a small gift at Christmastime from some of their customers.

Posted by Guest Driver #1444 on Dec. 19, 2013 @ 5:32 pm

For sure with this new set of laws we can control better these things!

Posted by Elan Impression 434 on Feb. 13, 2014 @ 1:00 am

I want to rent a similar yacht in Germany, do you think that it is possible in June?

Posted by Anwalt on Feb. 27, 2014 @ 3:23 am

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