Uber Technologies has joined in a dramatic federal lawsuit against New York City, targeting the city in its most important market, in a clash between Silicon Valley and one of its most important markets. The lawsuit is designed to prevent the new local law from being implemented, which the ride-hailing giant said would require it to keep bad drivers and fraudsters on its service. The central issue is Local Law 52 of 2026, which would provide more job security for ride-share drivers by preventing “unfair” and “arbitrary” deactivation of workers by the main ride-hail companies, such as Uber and Lyft. The suit, filed late Tuesday in New York federal court, says that the city is violating its authority “which could have profound implications for public safety.
The law is set to go into effect on July 28, after finally passing the New York City Council with a 46-5 margin of votes last January. It generally protects the rights of drivers who are denied access to the ride sharing app for large companies unless there is a “bona fide economic reason” or “just cause.” The law does allow for firing of drivers for serious incidents such as account sharing, fraud, violence, sexual harassment and assault, but Uber argues that the wording is too ambiguous and the due process requirements are too cumbersome to be practical in real-time situations where the safety of a passenger could be at stake.
The lawsuit comes after years of closely watching the urban mobility rules and it is evident that there is a sharp line between the operation of the gig economy and the protections of traditional labor. Uber operates with a digital-first, instantaneous feedback loop, while NYC is trying to apply a similar standard to ride-share drivers as unionized workers have with arbitration. The company’s ongoing protocol is usually to immediately deactivate the driver when he or she is rated low or a passenger reports a specific threat, which reduces risk. Now, it could lead to a challenge under the new law, which would leave Uber to defend itself to arbitrators or city officials before a city-wide ban can be imposed.
In particular, Uber objects to a new rule that calls for 14 days’ notice prior to most deactivations. The company says that giving someone time to respond after a serious incident has been reported allows a driver to “act in ways that could cause a dangerous scene” if they were just reported for a serious violation, or if they are suspected of fraudulent activity, “they could potentially retaliate against passengers or continue to behave in that manner while waiting for an appeal.” Even more, the law would lead to Uber having to potentially rehire drivers who were deactivated as early as 2019 if they did not get this particular notification, forcing the company to reintegrate users it previously removed for cause.
Uber was not shy about voicing its concerns about the potential risks of the law in its statement filed with the court. “This is a lawsuit to stop a reckless new law that would rob us of our right to instantly block potentially dangerous drivers and fraudsters from our platform and create an immediate danger to public safety,” the company added. The vigorous response is part of a larger worry by gig economy platforms that local governments are increasingly enacting “just cause” legislation, a concept that is good for people, but not fast and anonymous enough to accommodate a gig economy.
Uber also filed a constitutional challenge, claiming the law infringes on its freedom of speech and that it denies them due process of law under the U.S. Constitution and New York state constitution. The company referred to the “kangaroo” law as being “encouraging. In particular, Uber alleges that the law wrongly places the burden on the company to prove that a deactivation does not constitute unjust.In particular, Uber claims the law improperly places the burden on the company to prove that a deactivation is not unjust, forcing judges, arbitrators and officials at the Department of Consumer and Worker Protection to assume a deactivation is unjust unless Uber proves otherwise. In the eyes of the experts, it’s quite a legal move. In general, in contractual disputes, the party claiming the damage has the burden of proof. This would essentially allow the city to put the onus on Uber to continually prove that its safety algorithms and data on customer complaints are accurate, the city’s drivers alleged in their wrongful termination suits.
In addition, there is a privacy angle in this case. Uber contends that the law infringes on passenger privacy because it mandates that they alert the accused driver directly, as opposed to the company alerting the police.Uber says the law is a breach of passenger privacy because it will allow it to notify the police, but does not allow it to notify the driver of the incident of alleged abuse or misconduct. This can be the victim’s name, trip details and the victim’s narrative description before criminal charges are filed or protective orders are issued in cases of sexual harassment and/or sexual assault. The notion that a complaint might be given to the very individual it is being lodged against, just to meet a labour arbitration condition, is a frightening one for those who have been the victims of harassment. This is an issue that consumer protection groups are particularly concerned about, since they feel that drivers’ rights are taking precedence over rider safety.
Uber’s complaint is being reviewed by New York City Law Department officials, the department’s spokesman confirmed Wednesday. The city hasn’t yet submitted a response, but it’s likely to focus on the unfair power dynamics between a large multinational corporation and a single driver whose livelihood could be threatened by one unverified customer’s rating. The law’s defenders say drivers have been banned unfairly for years, because of Uber’s app’s glitches, false passenger reports to collect free rides or just a misunderstanding.Uber’s defenders say that drivers have been banned unfairly for years for years because of glitches in Uber’s app, false passenger reports to get a free ride, or just a misunderstanding.
