Labor Commissioner Rules Uber Driver Is Not An Independent Contractor

Jun 19 2015 - Independent Contractor - HRWatchdog

As HRWatchdog has previously reported, San Francisco-based ride service Uber has faced lawsuits from drivers claiming they were misclassified as independent contractors.

The California Labor Commissioner recently ruled in favor of one Uber driver finding that she must be considered an employee. The driver sought unpaid wages and business expenses; she was awarded $4,000 in business expenses she incurred as a driver.

But the award is small in comparison with the larger implications as both Uber and Lyft, another ride service, face larger class action lawsuits in federal court.

In this matter, the Labor Commissioner agreed with the driver and found she was an employee, not an independent contractor.

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the businesses of transportation,” said the Labor Commissioner. “The reality, however, is that defendants are involved in every aspect of the operation.”

The Labor Commissioner found many factors establishing control over the drivers— the right to control the manner and means of performing the work is the key factor in the independent contractor versus employee decision.

In addition, the drivers’ work was, without a doubt, integral to Uber’s business of providing rides to passengers.  Without the drivers, the business would fail.  When the work being done is an integral part of the regular business of the company, it points to an employer/employee relationship.

The Labor Commissioner noted that Uber:

  • Obtains the clients in need of the service and provides the workers to conduct it
  • Screens prospective drivers
  • Controls the tools the drivers use: cars must be registered with Uber and no more than 10 years old
  • Monitors drivers’ approval ratings and terminates their access to the Uber app if ratings fall below a specific level
  • Controls the price for the trip and service fees; Uber alone can negotiate cancellation fees
  • Discourages tips

Uber filed a notice of appeal of the Labor Commissioner’s award in San Francisco County Superior Court (Uber Technologies Inc. v. Berwick, No. 15-546378).

The pending federal lawsuits are: Cotter v. Lyft, No. 13-4065 and O’Connor v. Uber, 13-3826 (U.S. District Court, Northern District of California).

This decision comes on the heels of an earlier announcement by FedEx that it has reached a $228 million settlement with drivers who claimed they were misclassified.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

HRCalifornia members can read more about the difference between independent contractors and employees in the HR Library. Not a member? See how HRCalifornia can help you.

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