An Uber driver is an employee, not a contractor, according to a ruling from the California labor commission. This is horrible news for Uber but good news for anyone concerned that the ruthless ride-hailing service is building a corporate empire by dicking over its drivers.
Uber insists that it’s a merely a tech company peddling a mobile platform that happens to connect drivers with riders, not a driving service. That’s a convenient way to think about the service, since it means Uber can shrug off the responsibility of treating is growing supply of drivers like they work for the company.
Semantics aside, this ruling makes it clear that Uber is a service that employs drivers.
“The defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” the commissioner wrote. “The reality, however, is that defendants are involved in every aspect of the operation.”
The ruling came after a San Francisco-based former Uber driver Barbara Berwick filed a claim against the company. Uber will have to pay her $4000 in business expenses for her stint driving for them.
Even though Uber tries to paint itself as a matchmaking platform for riders and drivers, it sets strict controls on how drivers conduct their business. Uber sets fare rates and prohibits drivers from collecting tips, and it has rules about what kind of cars they can drive. It’ll also boot drivers who receive low ratings on the app. As the ruling pointed out, that heavy level of control fits the profile of an employer.
While this ruling is just about Berwick, it will give drivers ammo in other cases, especially in California. This isn’t the first time Uber drivers have tried to get employee status; some Uber drivers have filed a class action lawsuit in order to be considered employees instead of contractors. And in May, a Florida agency ruled that a former Uber driver injured on the job was an employee.
That doesn’t mean that every Uber driver will be happy with this ruling. Many people driving as a side gig could be hemmed in by an “employee” designation, since 1099 workers have more flexibility. The divide between agreeing or disagreeing with the ruling may come down to whether a driver is picking rides up as a side gig or extra cash, or whether they’re attempting to eke out a living.
This is bad news for Uber because it’s in the company’s best interest to stay a “tech” company. The current model maximizes how much money Uber can make without being saddled with employment responsibilities.
This ruling means Uber may have to start doing stuff like paying for social security and medicare taxes for eligible drivers in California, and it could incentivize drivers in other states to make claims for similar employee standing. It’s a blow to the contractor economy.
Uber is appealing the ruling.
Update: Uber pointed out that the ruling only applies to one driver. “Reuters’ original headline was not accurate. The California Labor Commission’s ruling is non-binding and applies to a single driver,” a spokesperson said. “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.”
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