A recent decision by the California Labor Commissioner’s Office states that a former driver of the ride-sharing company, Uber, should be classified as an employee and not as an independent contractor. The decision is nonbinding and Uber is appealing the decision in court. This ruling could have massive implications for the class-action cases currently pending against the company in California and other states across the country.

Uber Worker Identification

Ride-sharing companies such as Uber and Lyft work by utilizing a software app to connect riders with drivers that they identify as independent contractors for their company. Uber considers itself a technology company and not a car service. By identifying its drivers as independent contractors, Uber is not required by California or federal law to pay their workers overtime or provide certain labor benefits. By labeling their workers as employees, Uber will be required to reimburse all drivers for expenses, overtime pay, and provide other benefits.

The California Labor Commissioner’s Office ruled that one Uber driver, Barbara Ann Berwick, should be considered an employee and is entitled to more than $4,000 in reimbursed expenses from the company. It ruled that Uber would not be able to exist without workers like Ms. Berwick, thereby making her an employee of the company.

Impact of the Decision

The current decision by the Labor Commissioner’s Office places a serious roadblock in front of Uber’s rapidly growing business. By driving up payments to its drivers, the cost would be passed on to the customers which would in turn make the entire experience more expensive. This decision will most likely inspire workers at other similarly-run businesses like Lyft and Postmates to file similar petitions with the office in regards to their status as workers.

For Uber, this decision could also have serious ramifications on other lawsuits currently pending in California court. Cases are currently pending that are also challenging the classification of workers for the company. One legal expert weighed in on the situation and said, “Based on the decision, I think Uber is going to lose this appeal at the trial court and the court of appeals. The California Supreme Court is also full of Democratic appointees that are employee-friendly. Any employer would have a tough road in the California Supreme Court.”

The Labor Commissioner’s decision is binding only to the single driver that filed the petition, but it could be used as precedent in other cases. Currently, Uber is appealing the decision of the office to the California court, where it could be overturned.

Contact Our Attorneys Now

The classification of workers in a business can make or break that organization’s success. At Garcia & Gurney, A Law Corporation, we understand how critical these labor and employment decisions are for your business and are here to help. We work with clients throughout Pleasanton, Alameda County, and the Tri-Valley area. Call or contact our office today for a confidential review of your labor law case.