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Uber hit by employee-vs-contractor legal ruling in California

UBER, the asset-light worldwide California transport concern, has run afoul of a legal ruling that has plagued California truckers for some time - whether drivers are independent contractors or employees.

The California labour commissioner said Uber was a US$40 billion Silicon Valley technology corporation, but also like a taxi company or a pizza delivery service in its transport mode.

As such, said the ruling filed in a San Francisco court, its drivers should be classified as employees, not independent contractors, a decision that could disrupt the entire business model if other agencies were to agree, said London's Financial Times.

The plaintiff was Barbara Ann Berwick, who drove for Uber. The commissioner said her work was "integral to" Uber's business and the company should pay her expenses.

"Defendants are in business to provide transportation services to passengers," the ruling states. "Plaintiff did the actual transporting of those passengers. Without such drivers such as the plaintiff, defendants business would not exist."

But Uber said it is different from a transport company because it does not own vehicles and merely provides a smart phone app that connects drivers and customers needing transport.

"The reason drivers choose to use Uber is because they have complete flexibility and control," said the Uber statement.

Uber said it would appeal and noted that five other US states had found that its drivers should not be classified as employees. The company said the ruling was non-binding and applied to a single driver.

But Stanford University law professor Bill Gould cautioned: "It is clear that a major element in this business model for this employer was depriving these individuals of employee status. That advantage, if the courts upheld the commission, is gone."