Questions of Liability in Car-for-Hire and Rideshare Services

Uber, Lyft, Sidecar and other non-traditional car-for-hire services are growing quickly in the Seattle and other major metropolitan areas. I have used Uber several times and find the service fantastic, the system easy to navigate, and the rides affordable. I haven’t used Lyft yet as the large pink mustaches frighten me.

The ongoing news stories surrounding these services are interesting; there are some real fights brewing over traditional, entrenched, and heavily regulated taxi companies and their more freewheeling rideshare competition. Both sides have some excellent points. 

This post focuses on questions of liability with these non-traditional cars-for-hire. The question of the services’ legality or competition with traditional taxis is a different subject all together. I will say that Thanh Tan with the Seattle Times points out part of the ongoing concern with rideshare programs is the grey area in which they operate. Regardless of any legislative outcome that may change the playing field, these new services are too good and consumer friendly to disappear.

Who is Liable if a Car-For-Hire/Rideshare Injures Me?

Uber Sued over Young Girl’s Death – This is an awful thing to hear or read. Though this incident took place in California, it highlights the difficulties a person injured by non-traditional car-for-hire service may face in bringing a suit. Specifically, who the at-fault parties are. Is the driver, vehicle owner or the parent transportation company (Uber, Lyft etc.) liable?

While questions of liability are more firmly answered in the traditional taxi-cab setting, these new business models contain unresolved questions. Drivers may be lay-people with minimal mandatory insurance coverage; though they are “encouraged” to comply with the law. There are questions regarding the legal status of a driver:

  • Is the driver an employee, an agent or an independent contractor?
  • Is the driver’s “employer” or the vehicle owner also responsible for injuries caused by a negligent driver?
  • Was the driver within the course and scope of his or her employment or contract?
  • Was the driver acting as an “agent” of the parent or dispatch company?

When is the Driver Considered Working?

In the California case, there was a question of whether the driver was on the clock. He had no fare but may have been using a personal communication device to look up or accept fares. These liability issues matter to an injured party who is trying to recover damages related to a life-altering event. These are common questions encountered in personal injury, workers’ compensation, or employment cases and an attorney will need to resolve a few details:

  • Should the driver be considered working only when they have a passenger?
  • How about when they are travelling to pick up a passenger?
  • When waiting to accept a fare and/or communicating with dispatch?

If the driver is considered an employee and/or agent of the dispatch company then that company could be liable. If they were truly an independent contractor, then as Uber points out, Uber may not be liable acts outside the scope of their contract. The question of who may be brought into an action is vitally important to an injured party when insurance coverage limits are at issue with an un or under-insured driver and a parent company denying any liability.

What about Liability in Washington State?

In the State of Washington, RCW 46.61.667(2)(D) is the generally applicable statute governing use of personal “smart” devices in a car. Does the Uber or Lyft system qualify as an exception under (2)(D)?  Does an Uber or Lyft driver qualify as a “for-hire operator” and is the device they use to communicate with dispatch “permanently affixed”? If an accident occurs as a result of an Uber or Lyft driver trying to communicate with dispatch who can be held liable? As demonstrated in the California case Uber takes the stance that each of its “drivers” are independent contractors and liability does not extend to them when drivers have no passenger as they are not engaged in work.

We are currently in a period of innovations in taxi cab and rideshare transport. The Seattle City Council is trying to tackle some of these concerns early this year. 

Until these regulation and liability questions are fully resolved through legislation or litigation, I expect significant fights over who is at fault to continue.

Most individuals likely do not consider the liability or insurance coverage of their transportation when they hop aboard. I admit that I don’t. We all possess a simple belief that a driver has insurance and follows the law. Unfortunately unless you are an employment or personal injury attorney following these issues you may not know what that law is. You should contact your attorney if you have questions.

Update March 17, 2014: After recent events and controversy regarding wrongful death lawsuits, Uber and Lyft have taken measures to close the insurance gap for drivers while logged on but not transporting passengers. Uber will cover $50,000 per person in an incident, $100,000 for bodily injury and $25,000 for property damage.