California Uber Driver Ruled to be Company’s Employee, Not Contractor

Last week, the California Labor Commission delivered a ruling that will undoubtedly have long-ranging consequences for the platform-driven tech company and its contemporaries.

San Francisco-based Barbara Berwick filed a claim against Uber after a stint working as a driver for the company, requesting compensation for outstanding wages and expenses incurred over a two-month period in 2014. Berwick argued that as an Uber driver, she had worked the equivalent of full workdays and was entitled to overtime pay. Uber, adhering to company policy, had classified her as a freelance driver, entitled only to commission on her fares.

The California Labor Commission, reviewing the complaint, held that because “[Uber’s] business would not exist” without Berwick’s and other drivers’ labor, Berwick should be considered Uber’s employee. The commission refuted Uber’s argument that the company constitutes a mere “technological platform” for independent contractors to find business, countering that Uber is “involved in every aspect of the operation,” including background-checking drivers and determining fares. Ultimately, the ruling held, Berwick was misclassified as an independent contractor and is now entitled to $4,152.20 in additional wages and overtime pay. Uber has filed to appeal the ruling.

The groundbreaking decision is contrary to a ruling produced by the same commission in 2012, as well as rulings from five other states which have separately concluded that an Uber driver performs services as “an independent contractor, and not as a bona fide employee.” Though not a binding decision, and one that applies only to a single individual, the commission’s decisive step away from precedent may foreshadow additional rulings in favor of workers who deserve the enhanced benefits which come with official employment status.

Like many other platform-based startups, Uber’s profitability depends on its drivers’ classification as independent contractors, since companies are not obligated to provide these workers with any benefits—no healthcare, no vacation time, and no overtime pay. Under the current classification system, Uber drivers are also responsible for expenses such as vehicle maintenance and repairs, and have no recourse if they are injured on the job. Even further, the company’s rules include a prohibition from collecting tips, a mandate that only certain types of vehicles may be used, and a disclaimer that the company can “fire” drivers whose ratings are too low. For a company that purports to simply organize independent contractors, such a heavy level of control actually suggests the profile of an employer—as the California Labor Commission has now officially recognized.

While the ruling, if made precedent, may complicate the employment status of those seeking to work for Uber on a part-time basis, it has the potential to change the lives and livelihoods of workers for whom Uber is the primary source of income. Undoubtedly, the commission’s decision will provide a much-needed reference point for further inquiries into Uber’s employee classification policy, as well as those of similar employment platforms.