Uber’s business plan may have just received a big blow from the California Labor Commission today as it ruled that one of the ride-hailing service’s drivers is actually an employee, not a contracted worker.
Uber was ordered by the court to reimburse San Francisco-based driver Barbara Ann Berwick $4,000 for work-related expenses she accrued while driving for the service. The ride-sharing company has maintained that it’s drivers are merely contractors, however the court ruled that Uber acts much more like a traditional employer than it claims.
“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 reality, however, is that defendants are involved in every aspect of the operation.”
The court’s ruling is non-binding and only applies to the one Uber driver in question, but it could open the company up to more lawsuits from its drivers that the company depends on to exists. A class action lawsuit filed against Uber on behalf of its drivers is set to go to trial in August, and could determine whether Uber has to reimburse drivers for lost tips and expenses.
In a statement issued by a company spokesperson, Uber says “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.”
That flexibility and control comes with consequences though. Uber requires its drivers to maintain a rating well above 4 stars to continue driving. If they drop below that, they have to pay Uber to take a driving to get their driver privileges back. The company also shuts off drivers’ accounts if they’re inactive for a couple of weeks. Exerting that much control over drivers sounds a lot more like an employer rather than just an app that facilitates rides between those with a car and those in need.
Uber says it plans to appeal to labor commission’s ruling.
