You hire a ridesharing service to take you from your house to a destination across town—could be work, could be an event, or it could be a friend’s house. During the trip, your driver gets distracted and sails into an intersection, not seeing the traffic light turn red, and an oncoming car hits the rear half of the vehicle you’re riding in. You suffer a broken leg and neck trauma, while your driver suffers only minor injuries. The driver of the other vehicle is sent to the hospital with neck and head injuries from the deployed air bag.
Because of your broken leg, you are out of work for four weeks. You decide to sue for damages and lost wages, but you are unsure who is liable. Is it the driver you hired, or is it the ridesharing company? After all, it was your driver’s error that led to the accident, but the ridesharing company says the driver acted as an independent contractor, which absolves the company of liability in the matter.
This is one example of the liability questions surrounding ridesharing companies operating in New York state. Because ridesharing started June 29, 2017 in the entire state (New York City has allowed ridesharing companies such as Uber and Lyft to operate since 2001), this is new territory for many drivers and passengers. Article 44-B of New York state’s Vehicle and Traffic Law—passed as part of the state budget—creates a separate section regarding Transportation Network Company services, which allows ridesharing companies to operate throughout the state. However, experienced civil litigation attorneys can help those involved in accidents with these types of companies to determine what their best course of legal action is.
In the example above, the ridesharing company will seek to disclaim and avoid direct liability because they do not consider their drivers to be employees. Though the drivers are vetted and paid by the company, they are actually treated as freelancers, complete with 1099 federal tax status. Drivers make their own hours, drive their own vehicles and choose what regions to serve, rather than drive company vehicles for set hours wherever the company assigns them. These factors allow ridesharing companies to claim their drivers as “independent contractors.” That means, in the end, only the drivers are liable for any accidents they cause.
This does not mean, however, that ridesharing companies are completely off the hook for ensuring customer safety. For example, ridesharing companies under N.Y. law must conduct background checks of their drivers. So, wouldn’t one expect a ridesharing company to be liable for damages if the driver in this example was found to have a checkered driving record in the past, or even a criminal record? It actually may depend on the type of infractions and how long ago they happened.
According to §1699 of the Vehicle and Traffic Law, ridesharing companies must reject a potential driver if they have been convicted in the last three years of the following traffic violations:
• Fleeing a police officer in a motor vehicle • Reckless driving • Driving with a suspended or a revoked license • Misdemeanor DWI and DWI-Drugs • Leaving the scene of an accident
Ridesharing companies must also look at a driver’s criminal history over a seven-year period for certain types of felonies including violent offenses, sexual misconduct and felony DWI/DWI-Drugs. Additionally, any person who is a registered sex offender is automatically disqualified from being employed as a driver. New York state also requires that these background checks be conducted annually to ensure that information regarding their drivers is current.
Contrast this to what taxi cab companies do to vet their drivers. In New York City, taxi cab drivers must pass a more rigorous background check, pass a drug test and receive special training before they can be hired. Even with all of those measures in place, taxi drivers obviously are equally prone to getting into accidents. It begs the question: Why is there a different standard?
If you look closely, the state regulations for ridesharing companies do not include a search to determine if their drivers have been in accidents or “minor” traffic violations. Nonetheless, it appears as though the ridesharing companies attempt to address this oversight. On their websites, Uber and Lyft represent to the public that they will reject a potential driver if they have more than three moving violations over a three-year period. Lyft uses examples such as “accidents or traffic light violations” to define moving violations, while Uber cites “speeding tickets or failure to obey traffic laws” as its examples. So, it is possible that a driver who has had multiple moving violations in the past could be hired by a ridesharing company if those incidents happened more than three years ago or—as can be the case with accidents—if they went unreported. However, it doesn’t make these companies liable for accidents that take place during a paid trip, since they can claim that they did their due diligence as required by state law.
Ridesharing companies may not assume liability when one of their drivers gets into an accident, but they do appear to try and afford some protection by making sure that drivers have sufficient insurance coverage. Both Lyft and Uber offer primary coverage for their drivers that activates from the moment they accept an assignment until they drop off their passengers. Section 1693 of the state Vehicle and Traffic Law takes it one step farther by requiring Lyft and Uber to carry a $1.25 million limit on their primary insurance policies—more than what is normally provided for in other parts of the United States and more than the state minimum for car owners, which is $25,000. In addition, New York state extends No Fault coverage for any of the driver’s and the passenger’s medical and health expenses, lost earnings and other expenses deemed reasonable and necessary up to a $50,000 limit. So in the case presented at the beginning of this article, the passenger could file a claim through the ridesharing company’s insurance policy to recoup medical expenses and lost wages associated with the broken leg, instead of pursuing remediation through the driver’s personal insurance.
What if it was the other driver’s fault? Uber and Lyft each have supplemental coverage through their third-party insurer in case the other driver doesn’t have insurance or is underinsured. As with the primary coverage provided in §1693 of the state Vehicle and Traffic Law, there is a $1.25 million limit on supplemental coverage in New York for accidents caused by uninsured or underinsured drivers. The passenger would need to contact the ridesharing company to file a claim through this supplemental policy, but the passenger—as well as the driver—should pursue remediation against the other driver first.
What happens if an accident involving a ridesharing driver takes place on an interstate trip? The basic rule still applies for the passenger—seek remediation through the ridesharing company’s insurance policy or the other driver’s insurance policy, depending on who was responsible.
In every one of these examples, the best option passengers have is to file a claim with the ridesharing company’s insurer. However, it is still up to the insurer to determine whether it will distribute benefits to the driver and the passenger. Attorneys should advise their clients that the insurer may deny the initial claim, even if the accident was not the ridesharing driver’s fault. If that becomes the case, the attorney should seek a settlement in arbitration or, failing that, in court.
The option a passenger does not have is suing the ridesharing company for an accident caused by one of its drivers. As long as the ridesharing companies can continue to claim their drivers are independent contractors and they have vetted them to state standards, it would be difficult to prove the companies have liability in accidents caused by their drivers. Attorneys should make their clients aware of this fact before proceeding with any arbitration or lawsuit to save time and any associated fees.
Mario D. Cometti is a partner at Tully Rinckey PLLC in Albany.