A proposed class action lawsuit claims Uber Technologies, Inc. and subsidiaries Uber Logistik and Uber USA breached their contracts with more than 96,000 New York City drivers by making paycheck deductions for sales tax and “Black Car Fund” (BCF) surcharges that were not permitted by the company’s terms. The 25-page lawsuit out of New York’s Southern District further alleges Uber’s “Upfront Pricing” was no more than a scheme by which the ride-hailing company surreptitiously paid drivers less than the fare amount quoted to passengers.
Filed by three named plaintiffs in conjunction with the New York Taxi Workers’ Alliance, the lawsuit claims that Uber’s contracts from 2011 to May 22, 2017 guaranteed drivers a set percentage of each fare while only allowing for the deduction of a “service fee” to serve as the company’s commission. The case contends, however, that although Uber and its subsidiaries were prohibited from deducting any amounts from drivers’ pay other than service fees, the company made further deductions represented as “sales tax” and surcharges for the Black Car Fund, a non-profit that provides workers’ compensation for black car drivers. Further, the case states that these allegedly improper deductions, made only for trips within New York State, came in addition to Uber’s typical 20-28 percent fee of a ride’s total fare.
The lawsuit goes on to claim that Uber continued to make improper “sales tax” and Black Car Fund deductions from drivers’ pay until the allegations from another class action led the company to revise its contract terms to allow for both deductions. Uber, in May 2017, amended its terms so that drivers were no longer promised the full fare paid by the passenger with only a service fee deducted and switched to a rate structure the company claimed was simpler and more transparent, the suit explains. Simultaneously, the lawsuit adds, Uber supposedly discovered it had been underpaying its New York City drivers and remitted tens of millions to the workers, an amount the case claims was “only a fraction of the total deductions Uber made in violation of its contracts.”
Prior to Uber paying out millions to drivers over improper pay deductions, when the company’s contracts stipulated that the workers would be paid the passenger fare minus only the service fee, the company rolled out an “Upfront Pricing” policy in April 2016 through which it purported to quote the price of rides to riders upfront in the interest of transparency. The case, however, describes this as a “scheme” that saw Uber effectively charging riders one thing and paying drivers another.
Under the “Upfront Pricing” policy, Uber’s quotes to customers in advance of trips were based on factors like the expected time and distance of the ride, but drivers’ pay was based on the trip’s actual time and distance, according to a Los Angeles Times report. The price the defendant quoted passengers was generally higher than what it paid drivers, and Uber pocketed the difference, the plaintiffs say. The case contends that this practice was explicitly forbidden by the defendant’s terms until Uber updated its contract in May 2017 to allow for upfront pricing.
The plaintiffs contend they are not bound by Uber’s arbitration clause since they are “transportation workers engaged in inter-state commerce” and thereby exempt from arbitration under the Federal Arbitration Act. The suit seeks to represent two classes of Uber drivers:
A class of arbitration-exempt drivers who worked for Uber in New York City between November 6, 2013 and May 22, 2017 and had BCF and sales tax deducted from their pay; and
a class of arbitration-exempt New York City drivers who fell victim to Uber’s upfront pricing scheme from April 2016 to May 22, 2017.