Uber: Greed by Any Other Name?
Uber’s ceaseless public-relations problems continue to mount by the week.
Last week, the rideshare giant landed a $3.5 billion investment from Saudi Arabia, making the oppressive monarchy, with its long history of human rights violations and its laws prohibiting women from driving, the company’s largest investor. In New York City, a group representing 5,000 Uber drivers filed a lawsuit charging that the company misclassifies its drivers as a way to avoid wage and hour laws and other labor law protections—just the latest in a string of similar suits. And as Uber struggles to find enough drivers with cars to meet increased demand, the company struck a deal with automakers and Wall Street investors to launch a vehicle-leasing program that some experts have likened to predatory lending.
For many, the onslaught of court cases and unsavory deals is a sign that the company is not the Silicon Valley disruption darling it has long been portrayed as, but just another corporation on the prowl for outsized profits.
Uber has operated in Saudi Arabia since 2014. For women, banned from driving themselves, it’s become a helpful way to get around—even while they continue to fight for equal rights. For some Saudi women, the deal was seen as a crass move to profit off of oppression. "They're investing in our pain, in our suffering. This institutionalizes women's inferiority and dependency, and it turns women into an object of investment." Hatoon al-Fassi, a Saudi women's historian told Bloomberg News.
Uber rejects this assessment. "Of course we think women should be allowed to drive," an Uber spokeswoman told The New York Times. "In the absence of that, we have been able to provide extraordinary mobility that didn't exist before—and we're incredibly proud of that."
Meanwhile in New York City, the New York Taxi Workers Alliance and ten Uber drivers have filed a lawsuit charging that the company misclassifies its drivers as independent contractors, which they say amounts to stolen wages and a loss of labor protections. It’s the latest in a string of legal actions against the company—the last one came in California, where drivers also alleged they were misclassified. Uber settled that case to the tune of up to $100 million in exchange for leaving the misclassification charge unsettled. The New York City case could result in a similar settlement, but it's possible that the Taxi Workers Alliance will try to push the case to court and get a firm ruling.
This case comes just weeks after Uberestablished a drivers association in New York City. It did so in partnership with a Machinists local that was trying to organize its drivers; the deal required that the unions stop organizing and refrain from launching lawsuits against the company. The Taxi Workers Alliance has criticized the deal for falling short of giving drivers collective bargaining rights, and some academics have said the association could become a company-controlled union—something that the National Labor Relations Act specifically forbids.
As Uber aggressively expands into new markets, it’s finding that there is a limited supply of drivers who have cars that meet the company’s standards. In response, Uber has raised $1 billion, with the help of Goldman Sachs, to launch a vehicle-leasing operation, dubbed Xchange Leasing, to get low-income people to start driving for them. Critics have likened it to a predatory subprime lending scheme. There is no credit requirement and Uber will automatically deduct payments from weekly paychecks. If drivers don’t drive enough or fail to make a payment, the company repossesses the vehicle.
Houston Chronicle columnist Chris Tomlinson writes, “Xchange Leasing sounds more like a payday-loan racket built into a company store. The lease increases the company's control over the driver, who Uber still insists is nothing more than an ‘independent’ contractor. How is someone independent when Uber controls access to customers, sets the billing rates, demands a minimum number of hours and owns the car and the predatory lease on it?”