Uber Drivers Sue Over Company's Tipping Policy

This year, car-service firm Uber has become a darling of the tech/services crowd. The San Francisco-based enterprise, which recently received a $200-plus-million cash infusion from Google, features a unique selling proposition is its use of an application to arrange rides. Well, that sounds fine until one looks under the hood at who receives what cut of the passenger payment pie.

A lawsuit was recently filed alleging Uber is not paying tips that drivers believe they have earned. The story, initially reported by Bloomberg reporter Joshua Brustein, appeared in yesterday's sfgate.com. The plaintiffs assert that passengers in Uber's taxi service are charged a twenty percent tip. Somehow, according to the litigation, Uber drivers don't ever get the money; Uber pockets it. (The firm faces similar litigation in two other cities.)

Uber has dismissed the lawsuit as "frivolous." What's more interesting is Uber's use of the Amazon defense, i.e., their business is consumer friendly and bad guys are trying to "stifle innovation." Meanwhile, unregulated Uber is muscling into turf that is highly regulated and occupied by connected, entrenched interests. At the same time, Uber keeps the unregulated tips, thus improving margins as Amazon did by not charging state sales tax on transactions.

What's "frivolous" is Uber's claim that consumer friendliness is its business raison d'etre. Uber's assumption that "disruption" is an unqualified benefit is a spurious one. It's fine to compete: it's bullshit to drape ruthless competition in the falsely virtuous cloak of technological progress.