California’s Labor Commission just delivered what could potentially be a significant blow to Uber’s business model. After a former driver sued to be reimbursed for driving expenses, the commission ruled that drivers working for the popular ride-hailing app are employees, not independent contractors.
“The 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 commission wrote in its ruling. “The reality, however, is that defendants are involved in every aspect of the operation.”
The ruling, which for now only applies to California drivers, is the result of a claim filed back in September by Barbara Ann Berwick, a former Uber driver. Berwick argued she was owed payment for expenses, such as mileage, incurred while working for the company, but Uber insisted that she was only an independent contractor and therefore not eligible for reimbursement. On Tuesday, the commission ordered the company to pay Berwick $4,000 in expenses.
The difference in classification is significant, as an employee status may force Uber to provide drivers benefits such as social security, health insurance, and unemployment insurance. Uber is in the process of appealing the decision.
Read the ruling its entirety below: