Uber Technologies Inc. faces a lawsuit claiming that the ride-hailing company is saving money by bypassing labor laws.
The lawsuit, brought on behalf of a car delivery service, alleges that Uber is misclassifying its California drivers as independent contractors and therefore avoiding the average $9.07 an hour payment in expenses and benefits that it would incur if drivers were properly classified as employees. That means, Uber could potentially be saving circumventing certain legal regulations related to minimum wage, overtime, meal and rest breaks, workers’ compensation and unemployment and health insurance, as well as Social Security and Medicare benefits. According to the lawsuit’s allegations, the ride-hailing company is saving more than $500 million a year through the improper classification, thereby getting more room to lower prices compare to rivals that pay drivers as employees.