The Gig Economy: Liability of Uber for the Conduct of Drivers
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This article discusses the principles of agency and the liability of Uber for the conduct of their drivers in the gig economy. It also provides recommendations for Uber to avoid acquiring any liability for the act of the drivers.
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Running head: THE GIG ECONOMY The Gig Economy Name of the Student Name of the University Author Note
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1THE GIG ECONOMY Inter-Office Memo To: From: Date: Subject:The Gig Economy Summary Statement The contractual or non-contractual relationship between the principle and the agent to enter into a legal relation with the third party on behalf of the principal is regulated by the principles of agency. In such a situation, the agent is allowed to make transaction on behalf of the principal. As decided in the case of Harris v Knutson 35 Wis. 2d 567 (1967), the agent is entrusted with the authority to promote the interest of the other party that is the principal. Based on this principle, the principal can be considered as an employer, but not in every cases. Agents are not always deemed as an employees that provides the rationale for the term ‘principal.’ As per the principle of agency, actual express authority provides that the principal and the agent enters into an explicit agreement to participate in a given action as directed by the principal (Fong & Li, 2017). For example, Uber has an agreement with the drivers to specifically pick up and drop their customer from one place to another. An actual implied authority refers to a principle when the principal enters into an agreement with the agent that the agent, although not exactly authorised by the principal, may take action on certain issue, based on the believe that the authority for taking that action has been delegated by the principal to him.According to the principles of agency, apparent authority is when the principal has an agreement with the third party and not with the agent. For instance, if Uber
2THE GIG ECONOMY orders the driver to not to take a particular route for dropping the customer due to the poor condition of the road, the driver will follow such order of Uber as he has apparent authority. Along with that, the principle of agency provides the principle of ratification. In such a case, the principal agrees to a contract of the agent when learns about the existence of such contract. This ratification makes the principal liable for the contract. If a driver having no authority to drop a customer does that anyway, the contract is binding on Uber if they agrees to the contract once he learns about the conduct of the driver. Liability of Uber for the conduct of the drivers The gig economy has allowed the individuals to continue or terminate the job relationship with the principal. It has recognised the part of independent contractors because of the free market structure (Lao, 2018). It can be said that Uber is operating in the gig economy as the role of the drivers are similar to that of the independent contractors. A question arises while imposing liability on the principals for the act of the drivers in such a situation. Uber may acquire liability for the conduct of their drivers in certain circumstances. In the light of this fact, Uber shall be liable for the apparent authority of the driver, as they are responsible for promoting the interest of the principal (Lee, 2014). Uber shall also be liable for a fraud or misrepresentation made by the drivers acting within his scope of apparent authority. Recently, Uber and one of its driver was charged with sexual assault committed by the driver (Forbes.com. 2018). Uber failed to learn that the driver had a pending charge against him at the time they hired him. Applying the principal of ratification, Uber can also acquire liability for the act of its driver if he accepts the request of a drunk customer to give him a ride. If the passenger induce the driver to commit any violent act, Uber shall be liable for the damages the customer
3THE GIG ECONOMY suffers. From failing to provide customer safety to underpay the drivers, there has been several incidents that makes Uber liable for failing to oblige with the corporate social responsibility. Recommendation To avoid acquiring any liability for the act of the drivers, Uber may limit their liability with the help of various steps. They should provide insurance to cover any damages of the customers. They should also specifically mention their expectation from their agents. They should address the potential issues that may arise from the third party services. Explaining the role of the drivers to them may help to manage the activities of the agent. The authority should be given to the driver to decline a request of a passenger who is drunk or may become a cause of conflict. Though Uber mention their driver to be an independent contractor, still they take the service of the driver as an employee (Todolí-Signes, 2017). Confusion may arise in such cases to impose liability for an injury or damage caused to the customer, and to avoid such confusion they should follow to mentioned steps and change their policy.
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4THE GIG ECONOMY References Dalley, P. (2011). A theory of agency law. University of Pittsburgh Law Review, 72, 495- 547. Fong, Y. F., & Li,J. (2017). Relationalcontracts,limitedliability,and employment dynamics.Journal of Economic Theory,169, 270-293. Forbes.com.(2018).Retrievedfrom https://www.forbes.com/sites/omribenshahar/2017/11/15/are-uber-drivers-employees- the-answer-will-shape-the-sharing-economy/#65c52cc95e55 Harris v Knutson 35 Wis. 2d 567 (1967) Lao, M. (2018). Workers in the “gig economy”: The case for extending antirust labor exemption. University of California, Davis, 51, 1543-1587. Lee, P. W. (2014). The Apparent Authority of the Unauthorised Agent. Todolí-Signes, A. (2017). The ‘gig economy’: Employee, self-employed or the need for a specialemploymentregulation?Transfer:EuropeanReviewofLabourand Research,23(2), 193-205. doi:10.1177/1024258917701381