Uber Drivers Are Employees, Not Contractors According to California Court

Mona Shah & Associates Global Blog

Uber Drivers Are Employees, Not Contractors According to California Court

By: Sami Haidar

On Tuesday, June 17, Uber, the multinational ride-sharing company, appealed a ruling by a California labor commission that declared Uber drivers to be employees, and not independent contractors as the company maintains. As the popularity of on-demand services continues to surge, this may well prove to be a significant ruling. This decision is also a vindication of the corporate structure of a well-known New York City EB-5 transportation project.

Since its inception, Uber has asserted that it is a “logistics company”, connecting drivers with users of the smartphone app. Under this structure, drivers were not directly employed or controlled by the company, but rather, operated independently while using the app to connect to customers and fares. However, as the ruling revealed, Uber was more than just a neutral smartphone application connecting drivers and passengers. The company had a wide range of employer-esque policies such as, providing drivers with phones, deactivating its app if drivers were inactive for 180 days, controlling what tools drivers used and monitoring driver approval ratings.

This ruling now implies that the company’s 26,000 drivers in New York City, 15,000 drivers in London and 22,000 drivers in San Francisco, in addition to its drivers in 300 other cities, will all be entitled to employee benefits like set salaries, workers’ compensation, unemployment insurance and health insurance. This presents an enormous upfront cost for Uber, threatening not only its business model, that has been castigated by transportation regulatory authorities worldwide, but also, its $50 billion valuation.

From the outset, NuRide Transportation, in New York City, took a dignified stand in recognizing its drivers as vital stakeholders in its operations, and not disposable pawns in a thinly veiled effort to reduce costs and liabilities. As the court ruling suggests, regardless of how innovative a company may be, there are no shortcuts when it comes to compensating employees for the work they do. The court decision is a validation of NuRide’s company structure that embraces a well-established employer-employee relationship, while still harnessing the vast potential of new technology in revolutionizing the way consumers get around.

Sources: Isaac, Mike, and Natasha Singer. “California Says Uber Driver Is Employee, Not a
Contractor.” The New York Times. The New York Times, 17 June 2015. Web. 17 June 2015.

Johnston, Chris. “Uber Drivers Are Employees Not Contractors, California Rules.” The Guardian. Guardian News and Media Limited, 17 June 2015. Web. 17 June 2015.