- California’s labor commissioner said a driver who connects with customers through the Uber Technologies Inc. app must be considered an employee, a decision that strikes at the heart of its business model, according an article at Bloomberg.
- San Francisco-based Uber, like other “sharing economy” startups, has built a business around a flexible car fleet piloted by people it contends are independent contractors.
- If upheld pending Uber's appeal, the decision might require the company to provide health insurance and guarantee a minimum wage—neither of which is required for contractors.
Bloomberg reported that Uber has battled regulators from Houston to Berlin on issues from whether Uber is required to follow existing taxi laws to how it handles rider data and even whether Uber cars can pick riders up at airports.
That is a much different battlefield from whether Uber can continue to treat drivers as indpendent contractors. Uber and its competitor, Lyft Inc., face lawsuits questioning whether workers have legal protections of employees. In this case, the ruling stemmed from a dispute with a former driver. Uber claimed the driver wasn’t entitled to claimed wages or expense reimbursement. The state labor commissioner disagreed.
“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 said in the decision. “The reality, however, is that defendants are involved in every aspect of the operation.”
This portends to get very interesting, as the courts will eventually have to determine whether or not Uber drivers are entitled to benefits, workers' comp, and other facets of being full-time workers.