Uber Faces Worst Legal Problem; Possibility Of Collapse Looming

Uber, now worth $68 billion, is now facing its worst legal battle. Uber's attempts at keeping its cost low backfired when a lawsuit was filed against it alleging that the company violates U.S. antitrust laws.

Uber refused to call drivers that sign up with them as employees. The company regards them as independent contractors negating the existence of an employer-employee relationship. Since the Uber drivers are considered independent contractors, their act of conspiring with each other, setting fixed price rates violates basic antitrust laws.

Uber has a big legal problem on it's hands in New York: https://t.co/tIYpMyniGj

— Zach Carter (@zachdcarter) April 21, 2016

According to Huffington Post, since Uber regards its drivers as independent contractors instead of employees, Uber is under no obligation to pay its drivers with employment benefits. Uber drivers are not entitled to overtime pay or even to a minimum wage. If drivers spend on something while driving for an Uber customer, they will not be reimbursed.

Labor lawyer Andrew Schmidt saw the practice of treating drivers as independent contractors as a clear-cut way of cutting company costs. In an effort to skirt labor laws, Uber didn't realize that by treating its drivers as independent contractors, these purportedly "independent" contractors must not enter into a collusion to fix ride-sharing rates, or else they will be "price fixing," an act violating U.S. antitrust law provisions.

According to the lawsuit, the technology that Uber uses, which allows independent contractors to set the same price is by itself a "price-fixing scheme." This then subjects customers to overcharges, which, the lawsuit said Uber must repay. Aside from the present antitrust suit that the ride-sharing giant is facing, it also faced multiple lawsuits from Uber drivers, who want the company to recognize them as Uber employees and not as independent contractors. Lexology mentioned that the drivers were seeking for reimbursements that are due them.

Uber pays $100m to avoid having to treat employees like employees https://t.co/sa9OjXFLXS via @pandodaily — Pando (@PandoDaily) April 22, 2016

The barrage of lawsuits that Uber is facing may topple the company and bring it to collapse. Uber recently paid $100 million as settlement to end two class action lawsuits filed by drivers. Since the parties settled, Uber still considers its drivers as independent contractors and not employees.

With the antitrust lawsuit still ongoing, plus the other lawsuits filed by its drivers, Uber will be facing long court battles. Uber should hope that when the time comes, it will have enough assets to cover judgment.