Commission Rules Uber Drivers Employees, Not Contractors

By and | June 17, 2015

A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.

The ruling, filed on Tuesday in state court in San Francisco, said Uber is “involved in every aspect of the operation.” It is the latest in a host of legal and regulatory challenges facing Uber in the United States and other countries.

Uber had argued its drivers are independent contractors, not employees, and that it is “nothing more than a neutral technology platform.”

uber-logo-vertical-darkIf Uber drivers are employees, that opens Uber up to higher costs, including Social Security, workers’ compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services.

But the commission said Uber controls the tools driver use, monitors their approval ratings and terminates their access to the system if their ratings fall below 4.6 stars.

Uber did not immediately respond to a request for comment.

The commission was ruling on an appeal by Uber of a labor commissioner’s award of about $4,000 in expenses to San Francisco-based driver Barbara Ann Berwick, who filed her claim in September. She worked as an Uber driver for just over two months last year.

Earlier this month, Uber lost a bid to force arbitration in a federal lawsuit brought in San Francisco by its drivers. Earlier this year, the same court rejected Uber’s bid to deem its drivers independent contractors, saying a jury would rule on their status.

In Florida, a state agency ruled earlier this year that Uber drivers are employees.

(Editing by Jeffrey Benkoe and Jonathan Oatis)


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Latest Comments

  • June 18, 2015 at 4:04 pm
    insurance_guy says:
    Actually, I will agree with you on your point. This ruling does expose that Uber has a fragile business model.
  • June 18, 2015 at 3:36 pm
    insurance_guy says:
    All I am talking about is profits. Believe it or not, I don't disagree with you regarding the business model concept, I use that explanation with my clients too. However, Uber... read more
  • June 18, 2015 at 3:34 pm
    insurance_guy says:
    There are 3 levels of control that the IRS and others consider for determining the definition of employee vs independent contractor. Uber failed on 2 of the 3. Those three lev... read more

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