California Uber Case: Employee or Independent Contractor?

On June 17, 2015, a California Labor Commissioner found that an Uber driver was an employee and not an independent contractor of the company and, therefore, was entitled to reimbursement for travel expenses. Dave DePaolo of Workcompcentral.com writes about the potential impact of the ruling on the workers’ compensation system in his column, Share the Duck:

News circulated fast yesterday when a California Labor Commissioner found that Barbara Berwick was an employee of Uber, and entitled to reimbursement for travel expenses.

Stephanie Barrett, the hearing officer for the case, noted that Uber delists any drivers whose ratings from customers fall below a certain point – four and a half out of five stars. The company also sets the fares customers pay for trips. Most importantly, the company owns the application, or app, that made Berwick’s work possible.

“Plaintiff’s car and her labor were her only assets,” Barrett wrote in the ruling. “Plaintiff’s work did not entail any ‘managerial’ skills that could affect profit or loss. Aside from her car, plaintiff had no investment in the business. Defendants provided the iPhone application, which was essential to the work. But for defendants’ intellectual property, plaintiff would not have been able to perform the work.”

DePaolo predicts that  that shared economy companies are more likely to thrive in states where the option to decline workers’ compensation coverage is or becomes available, which he calls “one more business related tool that provides the flexibility to transform chickens into ducks.”