California Labor Commission deems Uber driver an employee

A San Francisco–based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.

The ruling, filed into public record on Tuesday in state court in San Francisco, said Uber is "involved in every aspect of the operation." It is the latest in a host of legal and regulatory challenges facing the company in the United States and other countries. Uber argued that its drivers are independent contractors, not employees, and that it is "nothing more than a neutral technology platform" that connects drivers and passengers.

If Uber drivers are classified as employees, that would open the company up to higher costs, including Social Security taxes and workers' compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and perform other services.

The Labor Commission said Uber controls the tools driver use, monitors their approval ratings and terminates their access to the system if their ratings fall below a certain level. The commission made its decision on June 3, but it was put into the public record only on Tuesday, when Uber appealed the decision.

The June 3 ruling was on Uber's appeal of a labor commissioner's award of about $4,000 in expenses to San Francisco–based driver Barbara Ann Berwick, who filed a claim for unreimbursed expenses in September. She worked as an Uber driver for just over two months last year.

In response to the ruling, an Uber spokeswoman emphasized on Wednesday that the commission decision was nonbinding and it applied only to a single driver. "It’s important to remember that the No. 1 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," she added.

Also this month, Uber lost a bid to force arbitration in a federal lawsuit brought in San Francisco by its drivers. And earlier this year, the same court rejected Uber's bid to deem its drivers independent contractors, saying a jury would rule on their status.

In Florida a state agency ruled this year that Uber drivers are employees. 

Al Jazeera and Reuters