Uber
recently had puppy, pretzels and kitten promotions
Getty
Image
Uber had a promotion in Australia
Thursday for 15 minutes with kittens
NEW YORK (MarketWatch)—With pretzels
in Philadelphia, puppies in Washington, D.C. and
kittens in Australia, Uber is swiftly working to cultivate a warm and cuddly
image.
But the embattled ride-hailing
company has a lot to overcome, with rape allegations against a driver in India,
widespread regulation problems and criticisms of the company’s tactics.
That’s not to mention the recent
rumors of Google, whose venture arm is an investor in Uber, starting a
competitor ride-sharing service.
So are cute animals really enough to
assuage the public’s concerns?
Maybe not.
“They’re banking on the short memory
of the American public,” said branding consultant Rob Frankel. “I don’t think
they’re going to win this one.”
As Frankel sees it, the company is
focused on spinning the narrative with these feel-good promotions, but what it
should be doing is differentiating itself from competitor Lyft, he said.
Uber did announce a partnership
Monday with Carnegie Mellon to create driverless cars, but Frankel said by the
time the cars are available, he believes competitors will have them.
Uber could not immediately be
reached for comment.
Still, the one-time promotions
aren’t hurting the company, said Tim Calkins, a clinical professor of marketing
at Northwestern University’s Kellogg School of Management. They’re nice to
have, but don’t have much staying power, he said.
The kitten promotion did happen the same day as 11 Uber
drivers were scheduled to appear in court on charges of operating a commercial
passenger vehicle without a license. And Uber said it was offering the pretzels
Thursday after the Philadelphia City Council approved a resolution to support
UberX in the city.
Calkins said he believes Uber is
taking its criticism seriously and needs to address its problems with a mixture
of programs, policies and promotions.
The company does appear to be taking
the steps. It released reports in January saying its drivers earn more per hour than cabdrivers and saying
Uber has helped lower the number of drunken-driving crashes. Uber also
announced last week that it was implementing new privacy measures and training
after an outside law firm reviewed the company’s privacy policy.
Beyond the criticisms, Uber suffers
from a lack of prominent founding story, said Calkins.
“Uber is a little bit of this
faceless entity,” Calkins said.
In terms of marketing, Calkins said
Uber needs to tell the public how it came to be and make CEO Travis Kalanick
more recognizable, beyond apologizing for the company.
Rod Valencia installs a smart meter for CenterPoint Energy on June 5, 2009, in Houston. (Pat Sullivan/AP)
This is the second article in a three-part series titled “Your Brain on Energy” for our new Energy and Environment coverage. The first article, titled “The next energy revolution won’t be in wind or solar. It will be in our brains,” appeared last week.
Five
years ago came the promise: A great new way of saving money on
your energy bills was on its way. An impressive new device called a
“smart meter” — a key component of the much touted “smart grid”
— would let consumers actually see how much power they’re using in their homes, thus empowering them to change their habits and slash their bills.
President
Obama heralded the innovation: “Smart meters will allow you to actually
monitor how much energy your family is using by the month, by the week,
by the day, or even by the hour,” he said in 2009, as the federal government unleashed a $3.4 billion Smart Grid investment. “So coupled with other technologies, this is going to help you manage your electricity use and your budget at the same time.”
Lofty
words — but when it comes to changing people’s energy behavior, the
smart meter revolution so far hasn’t been very revolutionary.
True, the meters are everywhere — utilities have installed 50 million at
homes across the U.S., reaching 43 percent of homes overall, according
to the Edison Foundation’s Institute for Electric Innovation. But that
doesn’t mean consumers are easily accessing the available data or using
it to change their energy use.
“Initially I had pretty high hopes,” says Carrie Armel, a research associate at the Precourt Energy Efficiency Center at Stanford University and a leader of a new wave of behavioral research on energy use.
“I think the technology has a lot of potential. In retrospect, in that
nobody has really leveraged the technology along with efficient
behavioral techniques, I find it’s not surprising that we didn’t find
rate savings.”
Smart meters are a nifty new technology
that can record your electricity usage on at least an hourly basis (and
sometimes much more frequently). But behavioral research suggests
that technologies alone don’t necessarily change what we do, how we act,
the habits we form. In the case of smart meters, what still seems
missing in most cases are user interfaces that relay information from
the meter in real time, and translate it into dollars and cents.
Consumers also need much more access to an innovation called “smart
pricing” — in other words, electricity prices that vary based on supply
and demand — a key change the Smart Grid was designed to enable, and one
that might make it a lot more worthwhile to pay attention to your
energy behavior.
The upshot: Right now, smart meters
aren’t waking Americans up and making them conscious of their energy use
— because they aren’t being paired with what behavioral research shows
us is needed for that to happen.
This is the story of
why the smart meter revolution has, thus far, fallen short — and how we
can better use one of the most pivotal innovations in the electricity
sphere to save energy, cut greenhouse gas emissions and save a lot of
money. The problem of “rational inattentiveness”
To
see why we’re not getting all we could out of smart meters, let’s first
consider a major oddity — namely, that few of us have a clue how much
electricity we’re using in our homes or what it costs (that is, until
the bill arrives).
You know the drill: You use lots of
appliances and devices in your home, from your flatscreen TV to your
thermostat. You don’t really know how much electricity that consumes, or
what your resulting bill is going to look like. But you probably know
that a meter somewhere is tallying it all up in some alien unit called a
kilowatt-hour or kWh.
The
situation couldn’t be more different from another energy transaction
we’re all familiar with — going to the gas station. Here, as you pump,
you see gallons bought and cost incurred in real time. This transparency
is precisely why everybody has been so focused on plunging gas prices
lately. We expect them to prompt a big consumer response, as the evidence suggests Americans are quite price sensitive when it comes to gasoline.
Why don’t we have anything like this for electricity? (Scott Olson/Getty Images)
Information
about electricity costs might have a similar effect, if we received it
in a convenient way. If consumers saw their meter running up and what it
was costing in real time, they might be inclined to unplug a few
appliances, adjust the thermostat, and so on (actions that, if widely
adopted, could substantially reduce U.S. greenhouse gas emissions).
“There’s
no doubt in my mind that having knowledge and information about how
much you’re paying is a big factor in deciding how much to use,” says Ahmad Faruqui,
a smart grid analyst and principal with the Brattle Group in San
Francisco. “If you get a bill a month later, it doesn’t help.”
For
now, though, consumers largely remain “rationally inattentive” to how
much electricity they’re using at home, explains David Rapson, an
economist at the University of California at Davis. The information is
just too obscure and difficult to obtain — and there are a lot of other
ways to spend your day, as well as seemingly easier ways to save money. Show me the money
Smart
meters — 50 million of them now, more to come — have the potential to
help fix this problem, by generating actionable information about
people’s electricity use. So what’s missing? In short: Behaviorally
savvy ways of connecting people with their smart meter data and making
them more attentive to the cost of electricity.
Today,
utilities typically provide consumers with a Web portal where they can
see their smart meter data. Take California’s PG&E: It has deployed 9
million smart meters (both gas and electric) to 6.2 million individual
customers, says spokeswoman Libby O’Connell. Of those, 43 percent have
signed up for the company’s online portal — and 38 percent have gone
online to look at the data at least once in the last year, says
O’Connell.
That’s a big accomplishment — but web
portals may not be enough. First, not every utility is faring so well
with them. Many have had “difficulties attracting customers to access
and use their Web portals, and the ultimate value of these tools is
still an open question,” reports the Department of Energy. Indeed, a 2013 survey
by the Smart Grid Consumer Collaborative found that only 8 percent of
people were already using “online analysis of your specific energy
usage” provided by their energy or utility company.
It
takes time and effort to visit a Web site (like we all need
another password to remember). And as we know from behavioral research,
habits — like rational inattentiveness — are very hard to change, and default behaviors tend to persist.
It doesn’t help that, as with PG&E’s portal, the data displayed may
come with a delay of half a day or more — so you can learn how much
electricity running the dishwasher at 3 p.m. yesterday used, but not how
much you’re using now.
So are Web sites enough to break through the problem of “rational inattentiveness”? It doesn’t look like it. Enter behavioral science
So what do consumers need?
A variety of studies in the growing field of behavioral studies of energy use hint
at the answer. They suggest you must not only provide people with real
time information about their electricity use in the home, but also show
how that translates into dollars and cents.
One key
strain of evidence about how to make consumers pay attention to their
energy use comes from a radically different way of
purchasing electricity. It’s so rare that, unless you live in certain
areas such as Phoenix or Texas, you probably never have heard of it:
So-called “prepay” systems.
In
prepay, buying electricity is much like recharging a phone calling
card. You simply open an electricity account, pay in advance for a
certain amount of power, and sign up for regular messages — by text,
e-mail, or phone — about your account status. The cost of your power use
is subtracted from your balance daily, and you receive regular updates
about usage and how much money is left in your account.
It
may sound like a hassle, but it definitely leads to rational
attentiveness: Fail to replenish your account and you can have your
power shut off. Prepay also saves energy and money. It is prevalent in
Texas’s deregulated electricity market, and according to Nat Treadway of
Distributed Energy Financial Group,
which studies prepay arrangements, consumers typically use around 10
percent less electricity in these programs — because they have to
regularly monitor their power use.
The Salt River Project,
a large utility serving the Phoenix region, is the godfather of prepay.
Its program, called M-Power, dates to 1993. It’s managed through
in-home devices like the one below, which show people how much money
they have left and how much power that translates into. Customers swipe
pay cards to buy more electricity and refill those cards at ATM-like pay
centers.
An M-Power in-home device and pay card. (Salt River Project)
A 2010 study on
M-Power found not only that consumers loved it, but that it saved them
12 percent on energy bills, on average. “M-Power turns conventional
electric service on its head,” it noted. “Instead of paying an invoice
issued by the utility for recorded energy usage, the customer is
responsible for making sure that there is sufficient credit. … M-Power
requires that consumers pay attention to when and how they use
electricity.” The next step: Smart pricing and in-home displays
But of course, few of us have access to prepay. So what else works? Many studies suggest that providing real-time feedback about an individual’s energy use can change their behavior. One of the most compelling in
this respect, by Katrina Jessoe and David Rapson at the University of
California at Davis, came out last year in the journal American Economic
Review. It examined 437 Connecticut households, which had been randomly
assigned to one of three groups. All of the households received smart
meters that transmitted electricity use information every 15 minutes
— and for the control group, that’s all they received.
The
other two groups, however, received advanced notifications about
so-called “dynamic pricing” events — summer days when their utility was
forecasting high electricity demand, and would accordingly charge
significantly more per kilowatt hour. So if the study subjects cut back
their use during these blocks of time, they’d save a lot of money.
Finally, one group received both dynamic pricing information
but also in-home displays (see below for an example), so they could see
their energy use in real time, and its cost.
An in-home display from Rainforest Automation, which displays a red “stop” light when you’re using a lot of energy in your home.
The
result was sharp: The alerts about dynamic pricing events led to less
energy consumption, but the real savings came when you combined alerts with the in-home display. The houses that had both cut energy usage by 11 to 14 percent.
“When
they had the in-home displays, they were three times as responsive to
the price changes as when they didn’t,” says Rapson. He thinks that’s
because the displays let consumers experiment and see how much changing
various energy behaviors at home led to savings.
Suddenly, it became worth their time to pay attention to how they use power. The missing pieces
The
key upshot is that significant energy savings, empowered by smart
meters, might come from combining real-time information with dynamic
pricing. But right now, it appears that most Americans don’t have either of these things — even if they do have a smart meter.
Deployment of in-home displays under the federal Smart Grid initiative is vastly lower than deployment of smart meters. Only 9,800 have been deployed thus far — versus 15.4 million government-installed smart meters.
“The
widespread deployment of smart meters is an important step in giving
consumers access to an unprecedented amount of information and increased
control over their energy consumption,” said Energy Department
spokesman Lindsey Geisler. “With increased interest and demand from
consumers for more access to their own energy information, we anticipate
industry and developers will respond with increased availability on
more platforms — like smartphones and tablets.”
The
private sector doesn’t seem much better: The 2013 survey by the Smart
Grid Consumer Collaborative found that only 1 percent of Americans had
“a device in your home that lets you monitor your home’s electricity
usage using data from your smart meter.”One problem is cost — it’s not clear who should pay for these devices, the utilities or the consumer.
Something
similar goes for dynamic or “smart” pricing — one of the great
promises of the smart grid, and an idea that makes vast economic sense.
Smart
pricing is based on the observation that consumers generally pay a
fixed amount per hour for electricity, even as wholesale prices swing
all over the place as demand waxes and wanes. If electricity prices
reflected the actual cost of power, overall bills would go down because
utilities could reduce their generating costs — but people would also
pay more in situations of extreme demand, much like with surge pricing
on the Uber app.
“We economists have been saying for decades and decades, a flat tariff for electricity and water doesn’t make sense,” says Sebastien Houde,
an energy economist at the University of Maryland. “What we really need
is something that reflects the cost of producing electricity at the
moment you consume it.”
But if prices are going to become variable, the consumer has to have a way of knowing that. At present,only around 8 million Americans are
able to participate in a “smart pricing” program that lets them save
money by reducing their energy usage at certain peak times, according to
the Edison Foundation’s Institute for Electric Innovation.
And
still more radical savings may be possible, even beyond smart pricing.
According to one group of behavioral researchers, the “holy grail” of
getting people to think about (and subsequently use less) energy is
so-called disaggregation —
not only providing information about how much total power they’re using
in real time, but actually having that information broken down for every home appliance.
We’re pretty far from that world, though. Waking America up on energy
In
fairness, we’re in the first stage of a technological revolution. You
could argue that installing the smart meter hardware, first, was
necessary to enable the consumer gains that might then follow.
“It is the direction we’re heading, as more utilities express interest
in data presentment and time-of-use pricing,” says Patty Durand of the
Smart Grid Consumer Collaborative.
Furthermore, the
smart grid has many other benefits — fewer power outages, for instance.
And because smart meters provide utilities constant information about
your energy use, they no longer have to pay a human being to read your
meter. When utilities save money, they can pass on the savings to
consumers.
“Utilities are working to develop and
introduce new applications, technology and programs to enable customers
to make informed decisions with the information provided by smart
meters,” said Adam Cooper, senior manager of research at the Edison
Foundation’s Institute for Electric Innovation, a think tank affiliated
with the Edison Electric Institute, the utility industry trade group. He
continues: “More than 50 million smart meters have been deployed, and
as that number grows continued innovation and investment in digital
technologies will allow customers to communicate with their electric
company in new ways.”
Indeed, there are some successful programs out there. Oklahoma Gas and Electric Company, for instance, created a program combining smart thermostats with dynamic pricing and found that customers saved $191 annually on average.
Still,
the American consumer may not be faring as well in this transition as
those in some other countries. For instance, energy suppliers
are rolling out 53 million smart gas and electricity meters across Britain
from 2015 through 2020, with 1 million already installed. And according
to the British Department of Energy and Climate Change, every single
customer will be offered an in-home display.
It’s not clear anybody should be blamed for
the state of the smart meter revolution in the United States — turning
a vast ship takes time. But it’s equally clear that, had it been better
informed by behavioral science, consumers might be benefiting a lot
more right now. That’s stage two of the smart meter revolution — and
let’s hope it begins pretty soon. This is the second article in a three-part series titled “Your Brain on Energy” for our new Energy and Environment coverage. The first article, titled “The next energy revolution won’t be in wind or solar. It will be in our brains,” appeared last week.Chris Mooney reports on science and th
Paris cabbies driven to anger by competition from Uber
Published : 2015-02-01 20:43
Updated : 2015-02-01 20:43
PARIS (AFP) ― Renowned for a scarcity of taxis and grumpy drivers,
Paris is fertile ground for new transport apps such as Uber, but
traditional cabbies are not giving up without a fight.
Philippe Rossignol, 45, has been driving a taxi in Paris for 17 years and takes pride in the service he offers.
Sporting
a suit and tie, and with magazines, water and a plug for charging your
phone, he aims to offer a little more than the average cabbie.
But
his business is in trouble ― with profits down some 15 to 20 percent ―
and he lays the blame on mobile apps such as Uber, which have flooded
the market with amateur drivers.
Smartphones displaying Uber car availability in New York. (AP-Yonhap)
“There
are more and more of us taking a share of the same pie,” said
Rossignol, who comes from a family of taxi drivers, grumbling he can no
longer afford to knock off early when he’s close to home.
Similar
complaints have been heard from cabbies all over the continent, with
drivers staging anti-Uber protests from Madrid to London to Berlin.
But Paris ― with its tradition of protectionism ― was always going to be the most combative.
Indeed, Uber’s American founder Travis Kalanick says he got the idea for his company while struggling to hail a cab in Paris.
In
2010, a poll by Hotels.com put Paris dead last among the world’s
tourist hotspots for the quality of its taxis, the main complaint being
the rudeness of drivers.
The same year, a French think tank found
that its rigid regulations meant Paris had only 2.6 taxi drivers per
1,000 people, compared with 8.6 in London and 17.2 in Dublin.
The
government tried to prize open the sector in 2009 by offering a new
license allowing drivers to do prebooked journeys but not pick up
customers in the street.
However the idea only really took off when Uber arrived two years later.
Uber’s
app puts customers together with independent drivers, and allows them
to rate their chauffeur and see a map of the route ― giving drivers an
incentive to be polite, courteous and honest.
Rides in its
“UberPOP” service, which uses drivers without any kind of professional
license, cost around half an ordinary taxi ride.
The app has turned into a global phenomenon, valued last month at $40 billion.
Rossignol concedes that Uber’s success is partly a result of “certain shortcomings” with the City of Light’s taxis.
He
says call centers have put pressure on drivers to improve their
appearance and attitude, but he still feels the competition from Uber is
“neither right, fair nor healthy.”
His chief complaint is that
traditional taxi drivers face far stricter regulations ― including
annual inspections of cars and medical visits ― and must cough up for an
expensive license which many Uber drivers do not require.
“Today, a young person will work hard, gain his license, but he will no longer get a return on his investment,” said Rossignol.
UberPOP
is technically illegal in France, but the company has ignored the rules
and appealed a 100,000 euro ($113,000) fine it received last year.
Uber’s
Kalanick told a technology conference in Munich this month that the
laws only “exist because the taxi industry is trying to protect itself
through regulatory capture.”
He said Uber would create 50,000 new
jobs in Europe this year, and help take 400,000 cars off the road by
encouraging drivers to use taxis instead of their own vehicle.
That
is unlikely to convince Paris cabbies. Alain Griset, head of the
National Union of Taxis, says Uber only works because it forces down
wages.
“If politicians had any courage, they would ban this
business that takes advantage of people who use it to scrape together a
few measly euros,” he said.
$3 Tip on a $4 Cup of Coffee? Gratuities Grow, Automatically
Photo
At counter-service
restaurants, where a tip jar often sits by the register, DipJar offers a
way to tip when customers don’t have cash.Credit
Nicole Bengiveno/The New York Times
In other words: 25 percent, 50 percent or 75 percent of the bill.
There
was a “no tip” and a “customize tip” button, too, but neither seemed
particularly inviting as the cashier looked on. Under that pressure, the
middle choice — $2 — seemed easiest.
American consumers are feeling a bit of tip creep.
Leaving
15 percent for full service (the former standard tip at a sit-down
restaurant), and less for quick transactions, is considered chintzy by
some people. “We recommend 20 percent absolutely,” said Peter Post,
managing director of the Emily Post Institute, which offers guidelines
in etiquette.
The
very concept of tipping is expanding beyond the service industry, with
new platforms that enable Internet content creators to receive Bitcoin
tips that reward their creativity rather than a simple thumbs up (or
“Like”).
Photo
DipJar makes it easy to tip with a credit card at Dos Toros Taqueria in New York.Credit
Nicole Bengiveno/The New York Times
And
in many situations, merchants as varied as cab companies and beauty
salons rely on the ubiquitous touch screen or mobile app to push higher
and higher gratuities.
New
York City taxi riders paying with plastic are confronted with buttons
for 20 percent, 25 percent or 30 percent tips. Anything less has to be
manually entered (and calculated by the passenger).
Purchasers
of gift certificates for the day spa Euphoria are asked if they want to
include a staff tip; the option 25 percent is automatically checked for
those who say yes. (They, too, can manually change it to 15, 20 or 30
percent.) A Miami diner complained on Chowhound of an automatic 24
percent gratuity for a buffet lunch: “I’m a consistent 20 percent or
better tipper, but a 24 percent included tip on a buffet Sheesh.”
In
December, an Italian restaurant in Los Angeles, Alimento, took a
different approach. It added a second gratuity line to diners’ checks —
“tip” (for the server) and “kitchen” (for the traditionally untipped
workers in the back).
The
hints and prods come at a time when the plight of low-wage workers is
increasingly in the national spotlight and battles over raising the
minimum wage continue. Some states, including New York, are considering
lifting the subminimum wage threshold pay for workers like waiters, who
are expected to earn a substantial portion of their pay in tips. But as
expected gratuities edge up, even conscientious and generous tippers
wonder if there might be a better way.
“I
would much prefer everybody get a raise and do it the way the Europeans
do and include it in the price,” said Helaine Olen, a personal finance blogger and author of the book “Pound Foolish: Exploring the Dark Side of the Personal Finance Industry.” “But we don’t live that way.”
Instead,
Ms. Olen said, people should plan for tipping obligations like other
household expenditures. “You need to just sort of budget it in the same
way as if you’re going to fly and you know the airline is going to
charge for your suitcase.”
Tipping
as an American practice stretches back centuries. “There are records of
George Washington and Thomas Jefferson giving tips to their slaves,”
said Michael Lynn, a professor of consumer behavior at Cornell
University’s School of Hotel Administration, who has studied changes in
tipping habits. In the 1940s, he said, the average restaurant tip was
about 10 percent. “It’s very clear that tip sizes have increased over
time,” he said, adding that he could not predict how high they would go.
Some
question whether expected tips will edge up to a point where they can
no longer be counted on as “add-ons,” leading employers to rethink
pricing and salary structures. Patrons of the fast-growing car service
Uber frequently cite its ban on tips as one of the attractions, even if
prices are higher than for taxi fares. A brew pub called Public Option
that is scheduled to open in Washington, D.C., will not allow tipping;
its owner has said he plans to pay his workers at least $15 an hour.
Still, the concept of tipping is spreading. In March, a Silicon Valley company opened ChangeTip,
a platform that allows people to send small Bitcoin payments through
social media, email, Skype or text to show their appreciation for
content creators (or anyone) on the Internet.
The
service has been growing about 30 percent a month and now has about
60,000 users who have collectively tipped over $250,000, said Nick
Sullivan, founder and chief executive. The average payment, he said, was
a little over $1.
The
tips may be small, but Mr. Sullivan’s vision is grand: to disrupt the
advertising model on the Internet by replacing it with a system of small
altruistic micropayments. He even envisions a new concept: the viral
tip.
“One
of the neat things with the way ChangeTip works is all those tips are
public,” he said. “When I send you a tip over Twitter, your followers
can see it, so there’s an inherent potential for viral growth.”
Other technological innovations are making a difference for baristas and other counter employees. A company, DipJar,
has created an electronic tip jar — patrons who pay for their coffee,
ice cream or bagel with a credit card can dip the same card into a
receptacle by the register for a preset tip amount, usually $1. Last
fall, DipJar raised $420,000 from investors to expand its presence from
about 20 test sites to 500 locations in the coming months.
“DipJar,
when we heard about it, we thought, ‘This is a godsend,’ ” said Leo
Kremer, a co-founder of Dos Toros Taqueria, a small chain of
counter-service Mexican restaurants in New York. The company recently
removed the tip line from credit card receipts on transactions below $20
out of concern that “some customers found it presumptuous.” DipJar, he
said, “can generate more tips in a way that’s not intrusive.”
Far
bolder are the proliferating tablet-based point-of-sale systems that
force the issue by presenting consumers with a slate of generous
gratuity options before the transaction can be completed.
“The
onset of iPad P.O.S. systems is completely changing the way consumers
tip,” said Justin Guinn, a retail market research associate at Software Advice,
who recently completed a study on the effect of such systems on tipping
practices for clients in the restaurant industry. “Just this morning, I
gave a 40 percent tip on my $2.50 coffee because the cafe’s P.O.S.
system has a ‘smart tipping’ feature.”
Such
a feature, he explained, automatically adjusts preset tipping options
on orders less than $10 to $1, $2 or $3. But for orders greater than
$10, it changes them to 15, 20 or 25 percent.
If Uber and Lyft have to treat drivers as employees, it could get very expensive
Uber and Lyft drivers sue over their status as independent contractors
'The idea that Uber is simply a software platform, I don't find that a very persuasive argument,' judge says
Drivers
of ride-hailing services such as Uber and Lyft may have to be treated
as employees rather than independent contractors, a federal judge in San
Francisco said Friday.
In
a class-action lawsuit brought against Uber, drivers for the service
challenged Uber’s policy of classifying its drivers as independent
contractors unprotected by the California Labor Code. The drivers
contend that they’re employees entitled to a minimum wage, reimbursement
for expenses, overtime and other benefits.
“The
idea that Uber is simply a software platform, I don’t find that a very
persuasive argument,” U.S. District Judge Edward Chen said.
Chen commented in court Friday, but has yet to issue a ruling on the case.
Lyft
drivers have filed a similar lawsuit, arguing in the complaint that
they “are in fact Lyft employees” entitled to similar benefits.
In
both lawsuits, the drivers cite many reasons why they should be
considered employees: They’re integral to Uber and Lyft’s business, both
companies retain the right to terminate drivers at any time, and the
companies direct and control their drivers’ work.
Treating drivers
as employees could be costly for Uber and Lyft, which consider
themselves technology companies instead of transport companies. Unlike
taxi or limousine services, neither Uber or Lyft directly employ
drivers, nor do they own or maintain the vehicles used as part of their
service.
As of December, Uber had more than 160,000 active drivers
in 161 cities. Lyft, which operates in more than 60 cities, did not
reveal its driver count.
Lyft declined to comment, and Uber did not immediately respond to requests for comment.
The
issue of independent contractors being misclassified is not unique to
transport network companies such as Uber, Lyft and Sidecar. Just last
year, port truckers in Los Angeles went on strike over their status as
contractors, while FedEx has faced its drivers in court repeatedly over
the last decade over a similar issue. Twitter: @traceylien Bloomberg News contributed to this report.
Getty
Image 
