Uber and out

17 June 2015 By Reynolds Holding Follow @holdingren

A California labor agency says the ride-hailing service’s drivers are employees not contractors. A U.S. judge sounds open to the idea, too. It’s a serious warning sign for backers of TaskRabbit and other Uber-like business models. The added costs would disrupt these disruptors.

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The California Labor Commission on June 16 filed a ruling that concludes drivers for ride-hailing service Uber are employees rather than contractors.

The decision requires the company to pay the mileage, tolls and other expenses of the driver who sued, though her records were insufficient to support claims for overtime and other wage amounts. More broadly, the ruling could mean that Uber must pay all drivers workers’ compensation, unemployment insurance, Social Security and other costly benefits. Only California operations are affected, but the state is Uber’s home base and could influence how other regulators and courts view the issue. The ruling has been appealed.

Uber lost a bid earlier this month to force drivers suing for status as employees into private arbitration and out of U.S. district court in San Francisco. In March, that court rejected the company’s attempt to have the case thrown out without a trial.

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