Uber has said over and over that it creates jobs. Millions, in fact. But, the company has also maintained that its drivers are not employees, and it's definitely not a taxi company. Regardless of what Uber says, the California Labor Commission ruled today that at least one Uber driver is, in fact, an employee, Reuters reports.
The ruling came as part of a case where an Uber driver, Barbara Ann Berwick, claimed that Uber owed her remuneration for the more than 470 hours she worked, and the costs she incurred while working as a driver. These costs included bridge tolls and traffic tickets. According to a court order, Uber was paying Berwick's wages as a driver to a corporation she created in 1988 but maintains that she has no control over.
Uber argued that it is, the order states, a "neutral technological platform" that merely connects contractors to customers. In response, the commission argued that Uber is "involved in every aspect of the operation," since the company vets drivers and "control[s]" the tools they use by requiring that drivers register their cars. "By obtaining the clients in need of the service and providing the workers to conduct it," the order states," [Uber] retained all necessary control over the operation as a whole."
Perhaps most importantly, the commission found that Uber's business "would not exist" without its drivers. Thus, the commission ruled that Berwick "was [Uber's] employee." It's not clear which of Uber's tiered services Berwick drove for.
"The California Labor Commissioner's decisions in a Berman wage claim apply to the claimant, that employer and the facts presented in that particular case," Erika Monterroza, a spokesperson for the California Labor Commissioner, wrote in a statement. "The Labor Commissioner's evaluation of whether someone is an independent contractor or an employee is done case-by-case based on the facts before her."
The California Labor Commissioner hears nearly 35,000 cases similar to Berwick's every year. Once a ruling is made, the defendant—in this case, Uber—can appeal the decision with the Superior Court. According to Reuters, Uber is appealing the ruling, and the roughly $4,000 award the commission ruled it owes Berwick.
"The California Labor Commission's ruling is non-binding and applies to a single driver," An Uber spokesperson wrote Motherboard in an email. "Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver 'performed services as an independent contractor, and not as a bona fide employee.'"
Berwick's case isn't the first time an Uber driver has been found to be an employee of Uber, instead of a contractor. In May, a Florida driver for Uber XL—Uber's premium service—filed a claim with the Florida Department of Economic Opportunity so that he could receive unemployment after his vehicle was damaged. The Florida DEO found him to be an employee of Uber, Buzzfeed News reported.
The ruling sets a precedent that could shake up Uber's business model, which has largely depended on providing a platform to connect self-employed "contractors" with riders, instead of hiring on people as employees and providing them all the stability and benefits that come with that status.
In cities like Toronto, Canada, where Uber recently fought for its life in city courts this month, a main point of contention between Uber and the city was whether or not Uber is effectively a taxi broker. Uber has maintained that it merely provides a platform for contractors. If drivers are ever considered employees, it might not be as easy for Uber to make this case.
Thus far in its young life, Uber has gotten by with a lightweight operation that flouts traditional aspects of business like "having employees" or "following the law." But with a ruling that establishes its non-employees in their non-jobs as actual employees with real jobs—well, that could be uber bad.
Check out the full court order here, uploaded to Scribd by TechCrunch.
This is a breaking story, more information is being added as it becomes available.
UPDATE: Uber has responded to Motherboard with a statement. It reads, in full:
"Reuters' original headline was not accurate. The California Labor Commission's ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver 'performed services as an independent contractor, and not as a bona fide employee.' Five other states have also come to the same conclusion. It's important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control. The majority of them can and do choose to earn their living from multiple sources, including other ride sharing companies."
UPDATE: A statement from the California Labor Commissioner's office was added.
CORRECTION: While the story itself has been clear that the ruling affected one driver, the original headline stated that the ruling affected all Uber drivers in California. Although the ruling sets a key precedent for potential future litigation from Uber drivers, we've changed the headline to reflect the immediate impact of the case. Motherboard apologizes for any confusion.