Important Ride-Sharing Questions Come to Surface in Light of $28.5 Million Settlement by Uber After Lawsuit Alleges Background Checks Were Skipped

Multi-national ride-share company Uber, Inc. recently agreed to pay an eight-figure settlement to resolve safety related claims brought by riders who alleged that the company had made misleading statements about the safety of Uber arranged rides.  The company recently told a federal judge sitting in San Francisco that it had agreed to pay $28.5 million to resolve two class-action lawsuits brought on behalf of riders who used the service between January 1, 2013 and January 31, 2016.

The lawsuit and its settlement raise important questions when it comes to using ride-share companies.  What exactly are ride-share companies doing to make sure their drivers are safe?  In the case of Uber, the company was charging riders a fee up to $2.30 per trip for completing “industry-leading background checks” on its drivers.  For a company that according to Forbes was completing more than a million rides per day, the total amount of “safety fees” collected in a year would be staggering.  However, according to the allegations filed against Uber, these background checks simply were not happening.

So what exactly are these “safety checks” supposed to verify? In the City of Chicago, all taxicab drivers or “public chauffeurs” must submit to fingerprints to an approved background check agency, which includes a National/FBI level background check. The background check is intended to reveal past driver offenses which may disqualify them from being licensed, including things such as felonies, crimes of “moral turpitude” and drug convictions.  See Chicago Municipal Code Section 9-104.  In the case of Uber, fingerprint checks could, in theory, ensure that drivers would not have a dangerous criminal history.  This of course, may only work when a ride-share company elects to perform these National/FBI level background checks.  In the case of Uber, district attorneys in California said that Uber had failed to detect the criminal records of 25 drivers it had hired in two cities. When riders use a ride-share program that has not been required to meet laws requiring driver background checks, those riders may not know whether their driver has a safe criminal background.

This potential for harm raises another important question. Who pays for the wrongdoing of a ride-share driver when someone is harmed? The answer to this question may depend on a host of different factors.  Whether the conduct of a ride-share driver was intentional or negligent is an important factor in determining financial responsibility, as is the status of the ride-share driver at the time of an accident.  A ride-share driver who is “for hire” compared to a ride-share driver who has been “hired” may affect the amount of insurance available to compensate someone who has been hurt by that driver’s negligence. The answers to these questions may continue to change, as numerous insurance companies are beginning to write insurance policies specifically targeted at drivers for ride-share companies, such as Uber.

The safety of ride-share companies, and along with that, their financial responsibility for accidents is a topic that is likely to see rapid change in the next few years as insurance companies will likely continue to modify their policies to affect potential coverage.  Some of these issues will invariably work their way through the court system as unanswered questions are raised and hopefully, answered.  This topic will probably also continue to morph as local and state-level legislators take on these new problems as they arise.  We will be following these developments closely.