In the past, determining responsibility for an automobile accident was relatively straightforward. If someone driving their own personal vehicle caused an automobile accident, that person was responsible. If someone driving a company vehicle or a taxicab caused an automobile accident, not only the driver but the entity they were employed by was responsible as well.
But today, with the advent of ridesharing companies such as Uber or Lyft, a new scenario arises. If someone is driving their own personal vehicle for a ridesharing company such as Uber or Lyft, who is responsible? The driver? The company? Both? In the article below, we explore these questions of liability for automobile accidents caused by drivers for ridesharing companies such as Uber or Lyft.
What Are Ridesharing Companies?
A ridesharing (sometimes called ride-hailing) company is a business that matches passengers with vehicles, typically via websites and mobile applications. Typically, the ridesharing company provides a service used by both passengers and drivers. Passengers use the service to order a ride and are quoted a price, which may vary according to route, time, supply and demand, and other factors. Drivers use the service to receive and accept orders for rides, typically using their own personal vehicle to do so. The service uses technology such as Global Positioning System (GPS) to match passengers with nearby drivers.
Uber and Lyft are, by far, the predominant ridesharing companies, to the extent that Uber and Lyft are often used as synonyms for the ridesharing industry as a whole. While the article accordingly will focus on Uber and Lyft, there are other ridesharing companies to which it applies, including Fare, Flywheel, GroundLink, and RubyRide. These alternative companies typically offer a more focused business model when compared to Uber and Lyft, catering to narrower, specific needs.
Automobile Accidents Caused by Uber or Lyft Drivers
As noted above, a driver for a ridesharing company such as Uber or Lyft typically use their own personal vehicle to transport passengers using the Uber or Lyft application. Yet, at the same time, the drivers are working for Uber or Lyft; they use the Uber or Lyft application and Uber or Lyft takes a significant percentage of the ride fare as a commission. So, when a driver for a ridesharing company such as Uber or Lyft causes an automobile accident, is Uber or Lyft responsible?
The Doctrine of Respondeat Superior
In Virginia, the doctrine of respondeat superior is well established. Under this doctrine, meaning “let the master answer” in Latin, an employer is liable for the tortious act of his employee if the employee was performing their employer’s business and acting within the scope of their employment.
This raises two questions in the context of ridesharing companies. First, is a driver for Uber or Lyft an employee of those respective ridesharing companies? Second, when is a driver for Uber or Lyft acting within the scope of their employment?
Employee or Independent Contractor?
Not every person working on behalf of a company is an employee of that company. The law distinguishes between employees, on the one hand, and independent contractors, on the other. Unlike their employees, a company is not liable for the actions of their independent contractors under normal circumstances.
In Virginia, whether a particular individual is an employee or an independent contractor is not immediately obvious. When determining whether an individual is an employee or an independent contractor, courts in Virginia look to four factors: (1) selection and engagement; (2) payment of compensation; (3) power of dismissal; and (4) power to control the work of the individual. It is this fourth factor, the power of control over the means and method of performing the work, that is most determinative.
No courts in Virginia have considered the employee vs. independent contractor analysis in the context of ridesharing companies such as Uber or Lyft. That is to be somewhat expected, as this is still a new and developing area of law. However, when a court in Virginia is eventually confronted with the issue, they will likely turn to the courts of other states that have considered a driver for Uber or Lyft is an employee or independent contractor.
Of the courts in other states to have considered the issue, many have concluded that drivers for ridesharing companies are employees, not independent contractors. The most prominent of these decisions come from California.
In one case in particular, O’Connor v. Uber Technologies, Inc., Uber had argued that was merely a neutral technological platform that connected drivers and passengers, rather than a company in the transportation industry. The federal district court soundly rejected this argument, in the following memorable passage:
Uber is no more a “technology company” than Yellow Cab is a “technology company” because it uses CB radios to dispatch taxi cabs, John Deere is a “technology company” because it uses computers and robots to manufacture lawn mowers, or Domino Sugar is a “technology company” because it uses modern irrigation techniques to grow its sugar cane.
Finding that Uber would not be a viable business entity without its drivers, and that Uber exercises a significant amount of control over the drivers by, for instance, unilaterally setting the fares drivers can charge riders; overseeing an application process that includes background checks, city knowledge exams, vehicle inspections, and personal interviews; and having the power to suspend accounts with low dispatch acceptance rates, among other reasons. The court concluded that these factors outweighed the fact that drivers for Uber could control when they worked; “freedom to choose one’s days and hours of work . . . does not in itself preclude a finding of an employment relationship.”
“Control” is the predominant factor courts in Virginia consider when determining whether an individual is an employee or an independent contractor. Thus, it is probable that, like the California federal district court in O’Connor, a Virginia court would find that the driver of a ridesharing company is an employee of that company.
It is, however, worth noting that in at least three states— North Carolina, Arkansas, and Indiana—laws have been passed requiring ridesharing companies to classify all drivers as independent contractors. In these jurisdictions, courts do not engage in any employee vs. independent contractor analysis; the issue has essentially been decided by the legislative branch.
To summarize, whether a driver for a ridesharing company like Uber and Lyft is an employee or independent contractor is still an open question in Virginia. Given the control ridesharing companies like Uber and Lyft tend to exert over their drivers, courts in Virginia will likely conclude that such drivers are employees. However, it is always possible that Virginia’s General Assembly will pass laws requiring ridesharing companies to classify all drivers as independent contractors, as other states have done.
Within the Course and Scope of Employment?
An employer is only liable for their employees’ conduct if such conduct was done in the course and scope of employment. For example, if an employee of Uber is driving the vehicle they use for Uber pickups but in their personal life, Uber would not be responsible because the driver was not acting within the course and scope of their employment.
That is a clear-cut example. But it is not always so easy to determine when a driver for a ridesharing company such as Uber or Lyft is acting within the scope and course of their employment. Generally, a driver’s work for a ridesharing company such as Uber or Lyft can be sorted into one of three classifications.
The first classification is when a driver for a ridesharing company has turned on the app and is in their vehicle awaiting on a request. During this period, the ridesharing company’s liability is most limited, although (as discussed below) Uber and Lyft offer relatively small amounts of insurance coverage for bodily injuries.
The second classification is when a driver for a ridesharing company has accepted a request and is on their way to pick up a passenger. During this period, the ridesharing company should be fully liable under the doctrine of respondeat superior, even though the victim of an accident occurring during this period likely bears no relationship to the ridesharing company.
The third classification is when a driver for a ridesharing company is transporting a passenger in their vehicle. As with the second period, during this period the ridesharing company should be fully liable under the doctrine of respondeat superior. The ridesharing company will be responsible not only for injuries sustained by other drivers, but to the passenger of the driver for the ridesharing company.
Whose Insurance Covers the Accident?
While legal liability will determine which party is responsible for a lawsuit, in reality the most pertinent question is what insurance coverage will apply to an accident caused by a driver for a ridesharing company such as Uber or Lyft. These companies do provide insurance coverage to their drivers. However, the answer to this question also depends on the classification of the driver at the time of the accident.
First, if the driver for a ridesharing company is “offline” (for instance, if an employee of Uber is driving the vehicle they use for Uber pickups but in their personal life), then only the driver’s personal automobile insurance applies. By the same token, the insurance provided by Uber or Lyft does not apply at all.
Second, when a driver for a ridesharing company has turned on the app and is in their vehicle awaiting on a request, the driver’s personal insurance will typically exclude coverage. However, the insurance provided by Uber or Lyft will only provide limited coverage—up to $50,000 per person or $100,000 per accident for injuries sustained by persons other than the driver. There is no coverage during this period for the ridesharing company’s driver’s personal injuries or medical expenses.
Finally, when a driver for a ridesharing company has accepted a request and is on their way to pick up a passenger or when a driver for a ridesharing company is transporting a passenger in their vehicle, Uber’s and Lyft’s insurance policies will prove up to $1,000,000 in total liability coverage.
Therefore, it is important to determine early on in a case (1) whether the at-fault driver was working for a ridesharing company such as Uber or Lyft and (2) what “period” the at-fault driver was in while so working, in order to determine who best to address claims for injuries towards.
Fishwick & Associates: Fighting for Individuals Injured in Automobile Accidents
If you have been injured in an automobile accident by an Uber or Lyft driver in Virginia, Fishwick & Associates can help you understand your legal options, identify all the applicable insurance policies, and navigate your claims. To schedule your confidential consultation, complete our online contact form or call us at 540-345-5890.
References
A Guide to Uber, Uber.com, https://help.uber.com/riders/section/a-guide-to-uber?nodeId=5a9e5cd6-88f4-4597-b29a-4feb67d407c2 (last accessed April 21, 2020).
Driving for Ride-Sharing Apps Like Uber & Lyft – How It Works, Benefits & Drawbacks, Money Crashers, https://www.moneycrashers.com/drive-for-ride-sharing-apps-uber-lyft/(last accessed April 21, 2020).
8 Ride and Car Sharing Alternatives to Uber and Lyft, Industry Tap, https://www.industrytap.com/8-ride-car-sharing-alternatives-uber-lyft/39516 (last accessed April 21, 2020).
A Review of 14,756 Rides Found Uber and Lyft Taking a Much Bigger Slice of Drivers’ Fares Than They Say They Do, Business Insider, https://www.businessinsider.com/uber-and-lyft-take-rates-higher-than-admit-jalopnik-2019-8 (last accessed April 22, 2020).
Kensington Assocs. v. West, 234 Va. 430, 432, 362 S.E.2d 900, 901 (1987).
McDonald v. Hampton Training Sch. for Nurses, 254 Va. 79, 81, 486 S.E.2d 299, 300 (1997).
O’Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133, 1135 (N.D. Cal. 2015).
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.