A federal lawsuit filed on behalf of nonwhite drivers in the U.S. accused ride-hailing service Uber of racial discrimination, a media report says.
Shares of Uber Technologies at last check were down 4.3% to $35.16.
The San Francisco company is in violation of the U.S. Civil Rights Act for terminating the services of drivers of color based on their customer ratings, the lawsuit, filed in federal court in San Francisco says, according to a Bloomberg report.
“Uber is aware that passengers are prone to discriminate in their evaluation of drivers, but Uber has continued to use this system, thus making it liable for intentional race discrimination,” the former driver, Thomas Liu, said in the complaint.
The suit was filed on behalf of a proposed nationwide class of nonwhite drivers.
Liu said that while driving for Uber in San Diego, he experienced signs of bias such as customers canceling when they saw his photograph or asking in an unfriendly manner “where he was from.”
In October 2015 Liu, a former California Uber driver, was permanently dropped from the Uber network after his average customer rating fell below 4.6 stars. Liu said he received unfairly low ratings from passengers because he is Asian.
The ride-hailing company’s one-to-five-star rating system for drivers is filled by customers after they complete their rides via the Uber app.
Uber has said that the threshold for drivers varies depending on the average rating in each regional market, and that drivers with low ratings receive multiple warnings before being deactivated.
Liu filed his first complaint to the U.S. Equal Employment Opportunity Commission in 2016. The proceedings did not reach a conclusion about the allegations, but in August the EEOC authorized him to pursue them in court, Bloomberg reported.
Uber insists its drivers are independent contractors, who aren’t covered by the workplace protections of the Civil Rights Act, the lawsuit contends, according to the Bloomberg report. The suit says Uber wields enough control and relies enough on the drivers’ labor that drivers are employees who fall under the 1964 law.
In August, a California appeals court issued an emergency stay to a state law that requires Uber and Lyft to reclassify their drivers as employees.