Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

A U.S. federal judge recently ruled that a ride-sharing service must face a lawsuit alleging that the company has been pocketing tips meant for the drivers (Detroit Free Press, September 19, 2014). Uber Technologies is a smartphone-summoned car service based in San Francisco that has been charging a 20% surcharge on rides. Uber was founded in 2009 and is currently in 35 countries and more than 100 cities. It is valued at $18.2 billion and is the most valued ventured-back company in the world.

Filed in January, the class-action suit alleges that Uber has been keeping a “substantial portion” of the gratuity as additional revenue rather than sharing with its drivers. This lawsuit also accuses the company of misleading customers about the true cost of its service. The complaint characterizes Uber’s practice as unfair and deceptive because Uber keeps most of the surcharge and it’s not a gratuity.

Uber, Lyft and other car-booking companies have been facing a growing number of legal challenges. In Chicago, cab drivers sued the city claiming that these smartphone-summoned services are not subject to the same regulations governing conventional taxi companies. In Connecticut, Uber and Lyft have also been accused of racketeering by taxi and livery operators who accuse the companies of preying on established businesses and cutting legal corners by partnering with affiliated drivers instead of owning cars. That way, these companies claim they are different from taxi dispatchers and shouldn’t be forced to comply with existing regulations, such as driver background checks and liability insurance.

Prior results do not guarantee outcomes.
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