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The Gig Economy: Uber's Legal Responsibility

Info: 2427 words (10 pages) Essay
Published: 4th Dec 2020

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Jurisdiction / Tag(s): US Law

Headquartered in San Francisco California, Uber Technologies Inc. offers delivery services and transportation in most major cities in the world.  Uber drivers use their own personal vehicles, or they can even rent a vehicle from Uber. Uber bases its charges and pricing for transportation according to the distance that the rider travels. Uber also uses a dynamic pricing model for its charges during peak times where prices are higher and lower at off-peak times of the year. Like all new technology companies, Uber has had some legal issues that need to be addressed and rectified.

Duties and Responsibilities of Principal and Agent

 Considered to be the first of the gig economy, Uber believes in the idea that people will not work for just one employer but will prefer to work on projects for any companies that desire their skill sets and services. Uber has created a form of entrepreneurship for those individuals who like being their own boss, but it raises a host of legal questions for Uber around the law of agency. An agency has a fiduciary relationship that results in the manifestation of consent by one party to act on behalf of another person if they have that person’s consent. The principal is the party who employs another person to act on their behalf. The agent is the party who agrees to act on behalf of another individual (“Agency Law,” 1995-2012). However, Uber is late when it comes to corporate responsibility. Uber has had much controversy, but TFL’s decision to withdraw Uber license to operate in London, is just one of the many hurdles Uber must face; London was the most high-profile that has rocked Uber. With a lack of corporate responsibility and the many questions regarding the Uber's reputation needs to be addressed if Uber wants to survive the onslaught of legal problems (Rees-Williams, 2020). The legal mandates that Uber issues to its staff under corporate governance are usually bases of several values and principles which are the principle of actual express authority, implied authority, the principle of apparent authority and the principle of ratification.  On the other hand, an agency relationship is not governed by statutory law, the relationship is governed by common law which a majority of states follow can be found in a combination of called the Restatement of Agency and is followed by many courts in the deciding of cases that involves agency law disputes (Jennings, 2018, p. 556-557). According to Section 182 of the contract, act defines, "an agent is a person employed to do any act for another when dealing with third parties. The principal is the person for whom the act is being done, or who is being represented. The agent will essentially bring about a contractual relationship between the principal and third party, giving the agent certain rights, duties and liabilities geared towards the principal and third party and depending on the nature of the business(“Rights, Duties and Responsibilities of an Agent to his Principal,” n.d.).

Uber main principles of the agency

 Uber's main principles of the agency are issued to its staff under corporate governance that bases several values and principles: Actual Express Authority, Actual Implied Authority, Apparent Authority and Principle of Ratification (Robinson, 2016). Actual Express Authority directs the main principle, Uber, to enter into an implied and specific agreement with an agent. Actual Implied Authority is an explicit agreement entered by the agents (drivers of the principle) where Uber dictates the agency will employ the driver who acts as agents to the agency. Apparent Authority is an agreement that is reached between the agency and the customer and not the agent. The Principle of Ratification operates under the instance of the non-existence of any other authority but, gives room to the principle to contract with the agent

Uber Drivers Scope of Employment

 With the advent and rise of cell phones, Americans' access to individualized transportation has changed. Back in the days, a Taxi was the fastest, easiest way to get transportation in many unfamiliar cities. Today, that has changed, and Uber has taken the lead and has become the go-to-means way of finding quick transportation. This sounds good, but what happens when a passenger is injured while in an Uber car? In the older, taxicab companies, the drive was an employee and the company was an employer which means any recovery for damages can be sought from the company itself. However, Uber is a little different when it comes to compensation from injuries which are pursued when an individual is injured in an accident that involves an Uber driver ("How Do Accidents Involving an Uber Driver Work?" 2020).

 Each driver owes a duty of reasonable care to another driver on the road, to passengers, both driver and another vehicle, as well as pedestrians. However, if a driver breaches this duty by acting carelessly, their carelessness can cause an accident and cause injury to another, the driver is liable for those injuries. Although one driver maybe an Uber driver, the drive will be personally liable (personal car insurance) for any injuries sustained. The passenger in the Uber car can still bring a claim for negligence against another driver that caused the collision with the Uber car. In some states, such as Kansas, which only requires a driver to have insurance that covers $25,000 for injuries and $50,000 for total liability for a single accident. So, if a passenger is seriously injured, personal insurance of a driver may not be enough to compensate the injured ("How Do Accidents Involving an Uber Driver Work?" 2020).

Circumstances under which Uber might be liable for the conduct of its drivers

 Currently, Uber drivers in California will soon be classified as independent contractors and not the employees, this is contingent only if the Federal Courts in San Francisco approves a huge legal settlement. However, Uber's success of fending off employer status for labor purposes may still not satisfy the company should one of its driver run over a pedestrian or a passenger die. The driver classification and legal liability focuses on the fact the Uber exercise enough control over the driver's workday, setting hours, fares, work rules, and working conditions, as well as the hiring and the firing, Uber would be considered the driver's boss and not a provider of a computer program that helps the driver to pick up passengers. However, in California, this idea is being looked at differently when a person on the receiving end is an injured pedestrian, rather than a driver that is seeking the benefits of as an employee, such as minimum wages and reimbursement of expenses (Egelko, 2016).

 Many drivers maintain their own insurance, however, a serious fatal accident can involve millions of dollars of damages that can far exceed the driver’s insurance policy and placing the driver in a financial dilemma is one reason why Uber should take on some of the liability. Liability can be direct through arguing that the company did not adequately screen its drivers or vicarious, the latter being the most explosive type of agency liability that makes the company liable for the acts of its employees. Currently, Uber is being sued along with the driver, Djamol Gafurov, whose insurance policy has a $750,000 limit, and in this case, Uber is the defendant and liability has fallen upon them.  However, Uber is faced with another case that involves a six-year-old girl who was killed in a San Francisco crosswalk by Uber driver Syed Muzzaffar, who also injured several of the girl’s family members, Mr. Muzzafar was terminated by the principal.  However, the Communications Decency Act prevents liability, they argue that tech companies are just a conduit of information content providers. On the other hand, Domino’s Pizza faces a $32M verdict over a pizza delivery accident that killed a 65-year-old woman and the 70-year-old husband has permanent brain injuries. The driver was found liable, the independent franchise store that sold the pizza and Domino’s as well (Wood, 2014).

Steps to take to limit legal exposure for Uber Drivers

 Suffering many lawsuits since 2008, Uber now must take precautions and find other solutions to protect itself from the actions of its agents. Uber has paid millions of dollars to victims of actions caused by its drivers and Uber will continue to pay out large sums of money. Uber has suffered from the misconduct and actions of the drivers, which has become a liability to be known as a vicarious liability where the principal is being made liable for the action of the agent and this will continue if Uber does not make the necessary changes to its agreements with its agents.  In legal terms, the liability of the principal has to hold, there must be an equal relationship between the defendant and the wrongdoer, a connection between the established relationship and wrongdoer makes it just that it is the defendant who is liable and responsible for the actions of the driver ("Mohamud v WM Morrison Supermarkets plc," 2018). In order for Uber to avoid these types of cases, Uber needs to initiate a legal inclination that will bind the agent to be liable and responsible for his own actions, especially if the agent is found to be liable, the agent should take liability for their conduct and actions. By taking this measure, it will free Uber from being held liable for their drivers, however, if an emergency exists where there is a road accident and the driver takes the agent to a nearby hospital; this is the action initiated by the agent and not the principal. It would be beneficial if the principal constrains all liabilities to the agent to be able to handle the third-party matter by not making the agent liable for the cause of the accident.

For Uber to prevent being held liable, defining the nature of its relationship with the agents has resulted in the agency suffering from the actions of the agent filing lawsuits. The agent should be able to dictate the type of relationship to their employment with Uber or an Independent Contractor; the rights, obligations and legal responsibilities should dictate their relationship. Some factors for Uber to consider when making agreements with its agents can be used by the courts in cases where the agents' actions towards a customer are so severe such as rape by its driver, Uber should severe their relationship with the driver. Uber should investigate the type of control they have over their agents and make any necessary changes to how they conceive in controlling its agents. If the driver is an employee, this gives Uber control over how its agents work, based on their performance,  in order to reach a certain goal while a contractor, basically maintains a flexibility that is discrete to the nature of the operation and work of the agency. Implementing the right to exclusive services for a person should define whether the worker does any other work assignments other than their current assignment, they have to be delegated to perform, while an employee may be restricted to only one employer or if a contract allows the staff member to engage in other work assignments that are entirely different from their delegated work. The courts' job is to determine the nature of this relationship between the employer and employee if the employee is paid according to the hours worked; the courts should urge Uber to find work out a resolution for Uber and their relationship with the agent. In retrospect, making agents Independent Contractors seems more beneficial in terms of legal and liability; a contract service, the main obligations are delegated by the employee in any given situation, the contractor has the main obligation of providing these services only. Uber's decision to follow these recommendations on the nature of their operation, the delegation of duties and responsibilities, and the relationship between the agency and the agent, in order to avoid any liabilities based on the actions and conducts of the agents.

 In conclusion, Uber operating under several principals with different mandates to the principal on the regulation of the actions and operations of its agents, drivers with different operation norms and liabilities, taking these steps to identify the major factors that will bind the agents and the agency by clearly defining their relationship of being an employee or contractor. We can clearly see that in order to prevent liabilities, Uber should be minidful to implement the Independent Contractor to segregate the agent from the agency.


  • Agency Law. (1995-2012). Retrieved from wps.prenhall.com/chet_cheeseman_paralegal_2/61/15831/4052842.cw/-/4052848/index.html
  • Egelko, B. (2016). Uber may be liable for accidents, even if drivers are contractors. Retrieved from https://www.sfchronicle.com/bayarea/article/Uber-may-be-liable-for-accidents-even-if-drivers-7377364.php
  • How Do Accidents Involving an Uber Driver Work? (2020). Retrieved from https://www.copleyroth.com/personal-injury/accidents-involving-uber-driver-work/
  • Jennings, M. M. (2018). Business: Its Legal, Ethical, and Global Environment (11 ed.). Retrieved from https://strayer.vitalsource.com/#/books/9781337514392/cfi/2!/4/4@0.00:0.00
  • Mohamud v WM Morrison Supermarkets plc. (2018). Retrieved from https://www.lawteacher.net/cases/mohamud-v-wm-morrison-supermarkets.php
  • Rees-Williams, D. (2020). Uber is late to the party - corporate responsibility should come first. Retrieved from https://www.kksadvisors.com/blog/uber-corporate-responsibility
  • Rights, Duties, and Responsibilities of an Agent to his Principal. (n.d.). Retrieved from https://www.mbaknol.com/mercantile-law/rights-duties-and-responsibilities-of-an-agent-to-his-principal/
  • Robinson, C. (2016). Uber: Lessons on Liability and Risk for Corporates. Retrieved from https://www.lawadvisor.com/articles/uber-lessons-on-liability-and-risks-for-corporates
  • Wood, R. W. (2014). Big Liabilities for Uber, Sidecar, and Lyft? Retrieved from https://www.forbes.com/sites/robertwood/2014/01/08/big-liabilities-for-uber-sidecar-and-lyft/#7d649f1e5ccc

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