|
 The California Labor Commission's decision could ripple through the
burgeoning industry of providing services via smartphones, with
potential implications for other “crowdsourced” services such as
Uber rival Lyft, chore service TaskRabbit, and cleaning service
Homejoy.
The ruling - which Uber insisted applied to only one driver - was
the latest in a series of legal and regulatory challenges facing the
company and other highly valued start-ups in the United States and
other countries.
The June 3 ruling, which applies only in California, came to light
on Tuesday after Uber appealed it in a filing in state court in San
Francisco, where both the company and the driver in the case are
based.
Classifying Uber drivers as employees could mean considerably higher
costs for the company, including Social Security, workers’
compensation and unemployment insurance.
That in turn could affect its valuation, currently above $40
billion, and the valuation of other companies that rely on large
networks of individuals to provide rides, clean houses and other
services.
Because it is appealing, Uber will not have to change the way it
does business, for now.
Uber said in a statement that officials in five other states have
found that its drivers are independent contractors.
And in 2012, the same California commission found that another Uber
driver was an independent contractor, citing evidence such as the
ability of the driver to determine his own hours.
But in this case, where the commission appeared to have considered a
broader range of factors, officials found Uber is "involved in every
aspect of the operation."
Uber, however, touted driver autonomy.
"The number one reason drivers choose to use Uber is because they
have complete flexibility and control," the company said in a
statement. "The majority of them can and do choose to earn their
living from multiple sources, including other ride sharing
companies."
Uber has argued for years that its drivers are independent
contractors, not employees, and that it is "nothing more than a
neutral technology platform."
But the commission said Uber controls the tools driver use, monitors
their approval ratings and terminates their access to the system if
their ratings fall below 4.6 stars.
[to top of second column] |
Although the ruling affects only California, the state is Uber's
home base, one of its largest markets, and sets a path often
followed by regulators and courts in other states.
"Assuming it’s upheld on appeal, it may be more than influential,"
said Thomas Wassel, a partner at Cullen and Dykman. "It will be
controlling in California."
Establishing a nationwide rule on the status of the vast network of
workers used by companies that rely on smartphone apps to match
customers with services would take a new law by Congress or a ruling
by the Supreme Court, he said.
The commission issued its June 3 ruling on a claim filed in
September by San Francisco-based driver Barbara Ann Berwick, to whom
the commission awarded about $4,000 in expenses. Uber filed its
appeal on Tuesday.
In another case earlier this month, Uber lost a bid to force
arbitration in a federal lawsuit brought in San Francisco by its
drivers. Earlier this year, the same U.S. District Court rejected
Uber's bid to classify its drivers as independent contractors,
saying a jury would rule on their status.
In Florida, a state agency ruled earlier this year that Uber drivers
are employees.
In New York, taxi-enforcement agents seized almost 500 Uber cars
over the last six weeks for illegal street pickups, over half of all
its seizures for illegal-pickup violations, the city's Taxi and
Limousine Commission said. The seizures were first reported by the
New York Post and the New York Daily News.
Other headwinds for Uber include controversies over passenger safety
and "surge" pricing that increases with demand for cars.
(Editing by Jonathan Oatis)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
