California Juries to Decide if Uber, Lyft Drivers Are Employees

Mar 12, 2015 11:05 AM EDT | Matt Mercuro

Things are about to get interesting out in Silicon Valley.

Ride-hailing apps Lyft and Uber were not able to convince U.S. judges in separate cases this week that their drivers are independent contractors, not formal company employees.

U.S. District Judges Edward Chen and Vince Chhabria in San Francisco federal court determined in two different rulings on Wednesday that juries would have to decide the fate of Lyft and Uber drivers, according to Reuters.

Both ride-hailing apps face lawsuits looking for class-action status in San Francisco, which were brought on by drivers themselves who believe they are employees of the two companies and that they deserve to be reimbursed for expenses, like vehicle maintenance and gas.

Currently, Lyft and Uber drivers pay out of pocket for expenses and if the two companies are forced to start paying those fees riders could see the cost of a trip increase as well.

They would both have to pay worker's compensation, unemployment insurance and Social Security as well, according to Reuters.

A ruling in favor of the drivers would impact other startups as well who rely on large networks of privately contracted people to provide rides, clean houses and other services around the world.

"We are very excited about both rulings," said Shannon Liss-Riordan, an attorney for drivers in both cases.

Uber started its own quarterly magazine earlier this month for its 150,000 drivers that will features news about driver regulation updates, how to keep hydrated during long commutes and even where to find bathrooms.

Uber has grown into one of the world's largest startups the past couple of years. Currently the company is valued at $40 billion, with operations in 54 countries around the globe.

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

Both companies have not commented yet on the news.

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