Uber, Lyft Head to Court This Week Over Driver Benefits

Jan 29, 2015 10:00 AM EST | Matt Mercuro

Car services Lyft and Uber will head to court this week in order to decide whether their drivers are independent contractors or employees.

The two companies face separate lawsuits seeking class action status in San Francisco federal court, brought on by drivers who believe they are employees and are entitled to reimbursement for expenses like gas and vehicle maintenance.

Drivers pay for those expenses themselves currently, according to Reuters.

If a judge rules against the two ride-sharing apps, it could raise their costs beyond the lawsuits and force Uber and Lyft to pay social security, unemployment insurance and workers' compensation. Employees would also obtain the right to organize.

"If you're subject to the same rules as everyone else, investors might start asking "'Are you still this hot company?' The answer may be no," said Dean Baker, co-director of the Center for Economic and Public Policy Research in Washington, according to Reuters.

Rulings in the cases would apply just for drivers in California, plaintiff attorney Shannon Liss-Riordan said, according to Reuters.

Lyft's hearing is scheduled for Thursday, while Uber's hearing has been scheduled for this Friday, according to Reuters. Drivers have yet to say how much money they are looking for in damages.

Uber has raised more than $4 billion from major venture capital firms like Benchmark and Google Ventures, valuing the company at approximately $40 billion and making it the most valuable startup in the U.S.

More than 160,000 U.S. drivers used the Uber platform as of the end of 2014. Over half of them worked less than 15 hours a week however, according to recent data released by the company earlier this month. 

Lyft has raised $331 million from Andreessen Horowitz, Founders Fund and other investors.

The Uber app can be accessed in 161 American cities and Lyft is available in 60 cites.

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