Up-and-coming transportation service Uber finds itself in a sticky situation with a lawsuit filed against it by two San Francisco Uber drivers that claim the company takes 50 percent of their tips, The Verge reports. The practice of taking a share of employees' gratuities is illegal in California, so Uber's handling of tips could be violating California labor laws if it is established that drivers are actual employees. But Uber views drivers as contractors, and if that's the case the tip-taking practice isn't illegal.
This isn't the first such lawsuit, either. Earlier this year drivers in Chicago and Massachusetts reportedly filed similar complaints against Uber.
Uber makes a mobile application with which drivers-for-hire can connect with passengers and schedule rides. Google recently invested $250 million in the company, part of an investment round totaling $360 million. Following the investment, Uber was valued at $3.5 billon.
In a statement provided to The Verge, Uber says it "values its partners above all else," and calls lawsuits like this latest one frivolous. We're not sure how the case is going to play out, but complaints about business operations don't look good in the face of massive investments from major tech companies.
Posted Aug 29th 2013 4:30PM