Uber faces many challenges that include the legality of its services in various regions, classification of its business for tax purposes and hiring practices. Though these challenges have arisen as a result of various legal and regulatory factors, Uber feels that its business is being targeted unfairly across the board. The car service company has been accused of various malpractices and infractions that contravene the rules, laws and regulations governing the passenger transport services of different localities. This paper will examine whether these challenges are justified as the company’s failure to comply with regulatory frameworks.
Legal and Regulatory Challenges
The primary challenge that Uber faces is the legal action taken against the company where the company is accused of evading taxation through the acquisition of wrong class certification for its drivers. The decision of a “federal judge to grant a class-action status to a lawsuit that questions the employment classification of Uber drivers” (Isaac) illustrates the company’s attempt to avoid taxation. Significantly, the company is accused of refusing to employ drivers and engaging them as independent contractors. These actions separate the company from its drivers; hence it voids any liability on their behalf including the obligation to pay salaries, health insurance, and pay taxes.
The fact that “Uber’s lawyers lodged an application arguing that the Australian Tax Office (ATO) unfairly targets its drivers” (Lewis) illustrates that the challenges the company is facing on tax matters are not limited to the United States. The company claims that their “driver-partners” should pay and meet their tax obligations independently. The company’s attempt to distance itself from taking responsibility for its drivers has caused it to suffer numerous setbacks. The Constitutional Council in France upheld that “banning Uber’s Pop ride services was justified and conformed to the constitution” (Scott). The decision sought to protect the public especially since the company used drivers lacking professional licenses to pick passengers and constituted unfair competition to other taxi companies.
The challenges facing Uber are justified since the company has been attempting to maximize its profits through unconventional means that are irregular. The failure to employ its drivers to claim tax concessions is willful and manipulative of the legal and regulatory systems in place. The company sought to exploit loopholes that could allow it to run a business at low or no costs. Its failure to employ drivers while receiving payment for their services places both the passenger and driver at risk. The company’s assertion that drivers are responsible for their taxes illustrates the company’s intention to evade tax. Furthermore, by failing to take responsibility for their drivers, Uber exposes passengers to danger since some of the drivers lack professional licenses and may not be qualified to carry passengers.
Uber’s challenges can be avoided through a comprehensive restructuring of its business model. The company should recruit and engage drivers as permanent salaried employees. This ensures that the company is compliant with legal and regulatory frameworks established in different regions especially taxation. Besides, hiring drivers ensures that their competency and certification is verified towards the protection of employees. Though the company is innovative, it should not engage in practices that constitute unfair competition since they may cause the company to face additional challenges such as litigation or restrictions imposed by regulatory bodies.