Legal Liability and the Gig Economy
Instructions
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Uber is largely hailed as the advent of the gig economy, which is the idea that people do not work as permanent employees for one employer but instead work in a labor market characterized by short-term contracts or freelance work. While creating a new type of entrepreneurship for individuals, a gig economy raises a host of new legal questions about the law of agency for companies utilizing gig workers.
Your boss at an investment firm has asked you to evaluate Uber’s legal exposure for the conduct of its drivers, given the information below and identify, and to explain the law and legal liability in this vast new gig economy world.
Write a 3–4 page interoffice memo in which you do the following:
Summarize the main principles of agency law as they relate to Uber’s relationship with its drivers.
Analyze the circumstances under which Uber might be liable for the conduct of a driver who, while intoxicated, caused an accident involving personal property damage and bodily injury.
Identify the steps Uber can take, if any, to limit its legal exposure due to the conduct of its drivers.
Use the Strayer Library to conduct your research. Include at least three quality references. Note: Wikipedia and similar websites do not count as quality references.
Your assignment must follow these formatting requirements:
This course requires the use of Strayer Writing Standards. For Helpance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.
Your news brief or memo should include a heading, summary statement, background, and recommendations.
Typed, double-spaced, using Times New Roman font (size 12), with 1-inch margins on all sides.
Cite your references following Strayer Writing Standards. The format is different than other Strayer University courses. Please take a moment to review the SWS documentation for details.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcome associated with this assignment is as follows:
Establish what liability concerns exist for a specific business based on agency law.
INTEROFFICE MEMO
To:
From:
Date:
Subject: Assessment of Uber’s Legal Exposure for Its Drivers Conduct.
Summary Statement
Within a gig economy, work tends to be temporally and flexible. Moreover, companies prefer to hire freelancers and independent contractors instead of employing full-time employees. This type of set up implies that gig economies tend to undermine traditional economies where full-time workers are the norm, as they rarely change their positions, but the main focus in on establishing a lifetime career. From its initial public offering (Juzaitis, 2019), Uber outlined its mode of employment, where it clearly stated that it embraces the gig economy. According to Uber, the company believes that its drivers should be independent contractors because they have the option of choosing when, where, and whether to offer services on Uber’s platform or even offer services to other competitors (Juzaitis, 2019). However, this set up raises has the potential to raise various issues in regards to the driver’s conduct. This factor has made Uber face numerous legal orders in many countries across the globe. This Memo aims to demonstrate the principles that make Uber services and operations to be legal under Corporate Governance.
The Main Principles of the Agency
According to the actual express authority principles, Uber, who in this case, is the principal, engages the drivers to act as agents, in an explicit agreement meant to undertake a specific action like giving orders to pick and drop customers from one location to another (Butlin & Qc, 2018).
Another applicable principle is the actual, implied authority where Uber should enter into an explicit agreement with the drivers even though they are yet to authorize the specific action (Butlin & Qc, 2018). As such, the agents or drivers can infer the authority for the actions delegated to them.
Another applicable principle is that of apparent authority where there is no agreement between the principle and the agent but with the customer who, in this case, is the third party (Butlin & Qc, 2018). For instance, in a situation where the principal orders the agent against taking a specific route because of bad road conditions, the driver cannot disobey such an order because the principle is regarded to be the apparent authority.
Finally, ratification is another principle that can be applied in this case. This principle is applicable when there is no other authority in place. Instead, the principal enters into a contract upon learning about it with this ratification binding the contract (Butlin & Qc, 2018). For example, in a situation where the Uber driver lacks the authority to drop customers but goes ahead to drop them anyway, such a contract is considered binding, especially if the company agrees on this contract upon learning of the actions taken by the driver.
Uber Liability for Driver’s Conduct
The situations under which Uber might be held liable for the actions taken by its drivers are when their actions are within the apparent authority of the company. Under such circumstances, Amin (2018) argues that the principal is held responsible for the conduct of the agent.
Another Uber liability would incur from the driver’s conduct is when the driver misinterprets information or commits fraud while acting on behalf of the company. Amin (2018) argues that the principal is held responsible for the conduct of the agent when such conduct takes place.
Steps Uber Can Take to Limit Its Legal Exposure for Its Diver’s Conduct
It is legally abiding and very crucial that Uber should consider taking precautions to protect itself from its agent’s actions. Since Uber was founded in 2008, the company has had to deal with very many lawsuits on various occasions. In the process, it has been incurred millions in losses as a result of mistakes or actions taken by its drivers. On numerous occasions, Uber has had to suffer from vicarious liability due to the misconduct of its drivers. Under vicarious liability, Amin (2018) suggests that the principal is often held liable for the agent’s actions, even when the company is not aware or authorizes the actions taken by the driver.
Amin (2018) argues that the legal terms that dictate the principal’s liability n regards to this case stipulate that for a specific liability to hold, an equitable relationship must exist between the wrongdoer and the defendant. Additionally, there must be a connection between the wrong doer’s actions and the defendant to ensure that the claimant’s actions are upheld. To completely avoid or limit such cases in the future, Uber should first establish legal inclinations binding their drivers to their actions so that in situations where their actions are ostensible or appear to be legit and true, the drivers take liability for their conduct.
Another example is an emergency, such as during a road accident, and the driver ends up taking the agent to a hospital near the scene of the accident. Under such circumstances, these actions should be considered to be the driver’s actions, and the company should not incur any costs from it (Amin, 2018). Additionally, it would be appropriate if Uber constrains its liabilities to the driver and handle third party situations without holding the driver liable for his actions.
Recommendations
To ensure that the company doesn’t incur any liabilities, Uber should stipulate the kind of relationship it has with the drivers. Undertaking these measures is important because it would ensure that the company doesn’t have to suffer for its driver’s conduct or actions (Juzaitis, 2019). In particular, Uber should dictate the specific areas where the relationship with the drivers is an independent contractor because the obligations, rights, and legal responsibilities establish this relationship.
Uber should also consider certain factors, especially when negotiating contracts with its drivers, because such agreements are often relied upon by the court, especially in situations where the driver’s action towards a customer has serious effects or repercussions like in cases where rape has taken place (Juzaitis, 2019). Uber should, therefore, ensure that it has keen control measures when entering into contracts with the drivers.
Finally, Uber should not limit personal liabilities to its drivers, but it should also establish mechanisms on how to handle different situations where third parties are involved.
References
Amin, F. (2018). Legal Liability Company Based On Sharing Economy to Service And Consumer Providers. Substantive Justice International Journal Of Law, 1(2), 103. doi: 10.33096/substantivejustice.v1i2.23
Butlin, S. F., & Qc, R. A. (2018). Worker Status and Vicarious Liability: The Need for Coherence. SSRN Electronic Journal. doi:10.2139/ssrn.3123061
Juzaitis, A. (2019). ANALYSIS: The Liability Impact of Gig Worker Status. Retrieved May 26, 2020, from https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-the-liability-impact-of-gig-worker-status
