Uber driver is an employee: California

Uber has been ordered to reimburse driver Barbara Ann Berwick for expenses and costs.
Uber has been ordered to reimburse driver Barbara Ann Berwick for expenses and costs. PHOTO: REUTERS

Ruling a blow to ride-hailing service, which regards drivers as contractors

NEW YORK - In a ruling that fuels a long-simmering debate over some of Silicon Valley's fastest-growing technology companies and the work they are creating, the California Labour Commission has said a driver for the ride-hailing service Uber should be classified as an employee, not an independent contractor.

Uber was ordered to reimburse Ms Barbara Ann Berwick US$4,152.20 (S$5,500) in expenses and other costs for the roughly eight weeks she worked as an Uber driver last year.

The ruling was made on June 3 and came to light after Uber filed an appeal on Tuesday evening.

"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 labour commission wrote about Uber.

"The reality, however, is that defendants are involved in every aspect of the operation."

It cited a number of instances in which it said Uber acted more like an employer, including providing drivers with phones and having a policy of deactivating its app if drivers were inactive for 180 days.

The ruling does not apply beyond Ms Berwick and could be altered if Uber's appeal succeeds.

In a statement, Uber said the decision was "non-binding and applies to a single driver". It said individual cases in at least five other states have resulted in rulings that categorise drivers as contractors.

Although it affects only California, the state is Uber's home base, one of its largest markets, and sets a path often followed by regulators and courts in other states.

Classifying drivers as employees could mean considerably higher costs for Uber. That could affect its valuation and the valuation of other companies that rely on networks of individuals to provide services such as Uber rival Lyft, chore service TaskRabbit and cleaning service Homejoy.

Labour activists and others have said freelance positions, with people having little certainty over wages and job status, are a way for companies like Uber to minimise costs.

They say such control over workplace behaviour that Uber exhibits is typically the hallmark of an employee relationship, which should bring with it benefits and more stable pay.


A version of this article appeared in the print edition of The Straits Times on June 19, 2015, with the headline 'Uber driver is an employee: California'. Print Edition | Subscribe