Interoffice Memo: Legal Liability and the Gig Economy

Interoffice Memo: Legal Liability and the Gig Economy


FROM: Student’s Name


In the current economy, Uber has become one of the newest companies in the market, experiencing an immense growth rate within a short period of the time that it has been in existence (Isaac & Davis, 2014). Unlike the traditional taxi companies where a customer would manually call up a taxi or flag one down along the streets, Uber is unique in the sense that customers request the taxi on their mobile phones, where they indicate the specific time and place of their departure and destination. After the conclusion of the journey, the customers directly pay the driver, who works under the terms of their employment with the company. In the long run, it implies that the driver owes the company some percentage of the money paid by the customer.

The principal-agent relationship is defined as the arrangement whereby one entity, under legal terms, appoints another to act on its behalf. In this arrangement, the agent is required to act on behalf of the principal and is also not expected to have any conflict of interest while executing the acts (Jennings, 2018). Formally, this relationship between the principal and the agent is called the agency, and whose operations are governed by the law of agency. This law clearly outlines the guidelines, roles, and responsibilities of each one of the parties involved in the relationship. For instance, the law requires that the agent undertakes all the assigned tasks under the condition that the principle provides them with reasonable instructions. In my opinion, I think that Uber drivers are agents, as they act on behalf of Uber. As a matter of fact, according to the U.S labor agency, Uber drivers are contractors and not employees. The supporting evidence behind this argument is that Uber drivers set their own hourly rate, own their cars, and also have the freedom to work for Uber’s competitors. For this reason, they cannot be regarded as employees but rather independent contractors.

The question of whether to hold Uber liable for the conduct of its driver is a perfect example of a context where the law of vicarious liability may be applied. Considering a scenario where an intoxicated Uber driver causes an accident leading to personal property damage and bodily injury, the affected parties may have concerns about whether to sue Uber or the driver in question. This may be solved by putting the incidence in the context of whether the driver is an employee of Uber or an independent contractor. If the driver is an employee, then Uber is vicariously liable for his actions, but if he is an independent contractor, then the liability of his actions is restricted to him alone (McQueen, 2016). Besides, like earlier noted, in this case, the Uber driver is the agent, and Uber is the principal. As such, Uber can be liable for the driver’s actions if the actions are within the scope of its apparent authority. Therefore, since the driver is not an employee of Uber, and his intoxication is not within the scope of Uber’s authority, then Uber should not be held liable for his drunkenness. Hence, the civil remedy that the injured passenger may seek in court is punitive damage, which is compensation for injury due to the driver’s negligence.

There are several steps that Uber can take to limit its legal exposure for the conduct of its drivers. The majority of these steps involve formulating strict laws and zero-tolerance policies to various behavioral conduct. The first of these is discrimination, whereby Uber can impose strict policies against discrimination of any kind. This would mean that a driver can be denied access to their account in the event where they are found guilty of discriminating against their fellow drivers or riders. The discrimination in question could be on the basis of their race, ethnic background, religious beliefs, disability, and any other characteristic covered under the law. Secondly, Uber can reduce its legal exposure by communicating the consequences of illegitimate behavior with its drivers. This is because any form of fraudulent behavior destroys the reputation and trust of Uber to its prospective clients. Such behavior may include engaging in an argument with other drivers and riders, hiking transport costs, abusing promotions, and duplicating accounts, among others.

Thirdly, Uber may come up with a policy that restricts the possession of firearms for both the driver and the rider. The policy can clearly outline that possession of firearms while riding with Uber poses a risk for the individual to lose their access to the app. lastly, investing in technology like installing GPS trackers on the taxis could ensure the safety of both the rider and the driver. With this technology, Uber can easily track every ride, and at the same time, allow riders to share the details about their ride with their close friends and family members for safety and accountability purposes. Considering the three relationships of Principal-Agent, Employer-Employee, and Independent Contactor relationship, I would recommend the IC relationship for Uber to limit its exposure. This is because, in this relationship, the IC acts under his personal directions and control and comes up with the manner and means of how to execute the assigned tasks (McQueen, 2016). This implies that, in the case of an incident emanating from the bad conduct of the drivers, Uber cannot be held liable for their actions.

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