Business & Economy

Uber driver is employee, California Labor Commission says

Drivers for the app-based ride service Uber are employees rather than contractors, according to a ruling from the California Labor Commission.
Drivers for the app-based ride service Uber are employees rather than contractors, according to a ruling from the California Labor Commission.
Ariel Zambelich/NPR

In a ruling that could have implications for employees for on-demand businesses down the road, the California Labor Commission has found that a driver for Uber should be considered an employee rather than a contractor, contrary to how she had been characterized by the app-based ride service.

The ruling came down earlier this month but surfaced in an appeal filed by Uber in San Francisco Superior Court on Tuesday.

It stems from a case in which Uber driver Barbara Ann Berwick sued the company for additional wages and reimbursement for mileage and parking tickets.

The commission threw out her claim for wages, citing lack of evidence, but ordered Uber to pay her the reimbursements and interest.

In explaining its reasons, the commission noted that the ride service is "involved in every aspect of the operation" and not a tech platform "designed simply to enable drivers and passengers to transact the business of transportation," as Uber has long claimed.

"By obtaining the clients in need of the service and providing the workers to conduct it, Defendants retained all necessary control over the operation as a whole," the commission said in its ruling.

The commission downplayed the fact that drivers own and operate their own vehicles, making comparisons to a person making a pizza delivery who may use his or her own car but who is still an employee of the pizzeria.

Uber issued the following statement in response:

"The California Labor Commission's ruling is non-binding and applies to a single driver. 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."

On KPCC's Airtalk, labor attorney Shannon Liss-Riordan said the commission's ruling could mean that companies like Uber and Lyft will bear more responsibility when lawsuits are filed against their drivers. 

“If the drivers are employees that does make the liability against the companies that much stronger," she said. "That’s one of reasons Uber wants to distance themselves away from the drivers and call them contractors.” 

Liss-Riordan represents on-demand workers in two class-action lawsuits against a range of sharing economy companies, including Lyft and Uber.

San Francisco Chronicle reporter Carolyn Said argued that the decision would not have an immediate impact on the company, since it only applies to a single driver and is likely to be appealed for years to come.

"Once you examine it and look at how the California Labor Commission works - they are not used to set as precedents,” she said.

Still, Said, who covers the sharing economy for the paper,  that the ruling has created anxiety among similar "shareconomy" businesses.

"There are class action lawsuits against a range of companies that use on-demand labor,” she said, adding that if the lawsuit goes through, some smaller companies might just go away because they can’t afford complying with the requirements.

Correction: An earlier version of this story misstated when the labor commission made it's ruling. This story has been updated. 

You can read the court's ruling below: