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California Rules An Uber Driver Is An Employee, Not A Contractor


A ruling in California could have big implications for Uber and its business model. Uber is the big ridesharing company.


The California Labor Commission ruled that a driver who filed a complaint against the company should be classified as an employee of Uber, not an independent contractor. That means she is owed more than $4,000 in unpaid wages and expenses.

BLOCK: Now, 4 grand is no big deal to Uber, but the precedent this ruling may set could end up costing the company billions in lost market value. NPR's Nathan Rott took a ride and filed this report.

NATHAN ROTT, BYLINE: Uber describes itself as just a neutral technological platform, meaning it's just the service that allows you, the passenger, and the driver - in this case, a man named Marcos - to conduct business through them.

MARCOS: (Foreign language spoken).

ROTT: Marcos, who would prefer that we don't use his last name because he's relatively new to Uber, has only good things to say about the company and the flexibility it provides.

MARCOS: You work for yourself. You do what you have to do. You have a time for your family. You have a time for yourself. You make money.

ROTT: But despite being able to work when he wants and making money, there's a catch. Los Angeles Uber driver Harry Campbell.

HARRY CAMPBELL: I think a lot of drivers underestimate the cost of running their vehicle - things like brakes and transmissions that go out at 200,000 miles.

ROTT: Gas, tolls, wear and tear - the list is long. Campbell says that he, too, appreciates the freedom to work when he wants and the flexibility it provides.

CAMPBELL: But at the same time, this independent contractor classification has benefited companies like Uber and Lyft and Instacar a lot more than it has for drivers. I mean, they're not blind. They see that Uber is going from 10 to 20 to 30 to 40 - now $50 billion valuation. And drivers are actually making less money than ever because there are things like fare cuts.

ROTT: And those expenses. That's how Barbara Berwick felt. She's the driver that the California Labor Commission awarded roughly $4,000 in expenses and unpaid wages to. The ruling itself is not new. It was made in March, but it only came to light after Uber filed an appeal to the ruling Tuesday evening. The ruling challenges Uber - the defendant's assertion that it simply enables drivers and passengers to transact business through them, saying, quote, "the reality, however, is that defendants are involved in every aspect of the operation." Uber disagrees. In a statement, they said the commission's ruling is, quote, "nonbinding and applies to a single driver." It also said the decision contradicted a 2012 ruling, where the same commission concluded that a driver performed services as an independent contractor and not a bona fide employee. Uber is facing a number of legal actions, including a class-action lawsuit on behalf of other California drivers brought by Shannon Liss-Riordan, a labor rights lawyer.

SHANNON LISS-RIORDAN: Uber's been obviously, wildly successful because it developed a concept that caught on. But that gives it no excuse to just ignore all of those labor laws that have been put into place over decades that protect workers' rights.

ROTT: As Uber's appeal to the Labor Commission's decision moves forward, other on-demand companies are sure to watch. Legal experts say this could be a huge roadblock for the larger sharing economy. Nathan Rott, NPR News. Transcript provided by NPR, Copyright NPR.

Nathan Rott is a correspondent on NPR's National Desk, where he focuses on environment issues and the American West.