It would appear that the California Labor Commission has ruled that at least one Uber driver is an employee.
As it stands now, Uber employs its drivers as third-party contractors, operating as a logistics company that provides access to customer demand and directions, transactions, etc. for the drivers. Uber has argued repeatedly in various courts that it is not a transportation or taxi company, but rather a software platform that matches customer demand with supply.
This ruling changes all that, turning Uber into a transportation startup instead of a logistics software company. That puts the company in a position to face a number of legal obstacles, as well as rising costs of employing those drivers directly and offering them benefits, etc.
As BI points out, one of Uber’s main costs is its full-time employees that work out of Uber corporate offices. If Uber drivers are deemed employees, the business model shifts drastically.
Uber is said to have more than a million drivers using the platform across the globe.
Uber driver Barbara Ann Berwick filed a claim earlier in the year for not being paid out for her work. Through the course of that lawsuit, the California Labor Commission decided that Uber is far more than a logistics software company that matches supply with demand.
“Defendants are involved in every aspect of the operation,” reads the ruling, noting that Uber controls the tools drivers use and the transactions made through the app.
Here’s the most important part of the #Uber vs. California Labor Commission case: http://t.co/sRequNxJMQ pic.twitter.com/fwSzY0jNXb
— Polly Mosendz (@polly) June 17, 2015
Not surprisingly, Uber is appealing the decision.
Here’s the order from the Labor Commission:
We’ve reached out to Uber and will update the second we hear more.
Uber has reached out with the following statement, which we are looking into further:
Reuters’ original headline was not accurate. The California Labor Commission’s ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’ Five other states have also come to the same conclusion. It’s important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control. The majority of them can and do choose to earn their living from multiple sources, including other ride sharing companies.