In a recent decision by the California Labor Commissioner, a driver for Uber is considered to be an employee, and not a contractor. Uber is a transportation network company with headquarters in San Francisco, CA. It operates a mobile application that permits consumers to make trip requests that are routed to sharing economy drivers. Uber drivers in Florida have already been classified as employees earlier this year and California may be following Florida.
The ruling, which was issued on June 3, 2015, was made in response to a claim filed by an Uber driver named Barbara Ann Berwick, who is based in San Francisco. Berwick was awarded by the commissioner approximately $4,000, which covers the cost of her expenses and unpaid wages. However, Uber has filed an appeal, claiming that the company merely allows drivers and passengers to engage in business transactions through Uber.
This ruling is in stark contrast to the decision made in 2012 by the same commissioner, who ruled that the driver was an independent contractor. In that case, the commissioner considered such evidence as the driver’s ability to set his own hours. Uber also contends that in five other states, officials determined that Uber drivers were independent contractors. However, in this case, the commissioner seems to have considered a wider range of factors.
The rationale for the commissioner’s decision is that Uber is “involved in every aspect of the operation.” According to the commissioner, Uber has control over the tools used by the driver; Uber keeps track of the driver’s ratings; and Uber ends the driver’s ability to access the system in the event that the driver’s ratings drop below 4.6 stars.
The recent decision may well have far-reaching implications for Uber. If all Uber drivers are eventually classified as employees, then the company could incur higher costs, including Social Security, unemployment insurance, and workers’ compensation. As a result, the company, which is valued at over $40 billion, could take a loss in its market value. If the ruling is upheld on appeal, it could set a precedent that is followed by commissioners and courts in other states.