While federal lawsuits are still pending against Uber and Lyft seeking to reclassify the companies' fleet of drivers as employees rather than independent contractors, a new ruling Tuesday by the California Labor Commission puts yet another dent in Uber's case. As Reuters reports, the commission disagreed with Uber's longstanding argument that they are a "logistics company" and "nothing more than a neutral technology platform" for use by these contractors, countering that Uber not only controls the tools that drivers use, but monitors their approval ratings, and reserves the right to terminate them if their ratings fall below 4.6. Also, though drivers may not be told what hours to work, they are given phones, and their driver apps are deactivated if they don't pick up any fares for 180 days.
The ruling, which only affects California, came in response to an appeal by Uber of an earlier decision in a claim brought by San Francisco-based driver Barbara Ann Berwick, who filed for $4,152.20 in expenses back in September (Uber drivers are, under the company's rules, supposed to cover all their own expenses). And the ruling echoes one by Florida's Department of Economic Opportunity, which similarly determined last month that a driver there should be considered an employee.
And though the commission's ruling may not have the broad-reaching, national impact that jury decisions in the two federal cases will have, the New York Times has pounced on the story too, noting that it could be "precedent-setting." It also stands to affect Uber's widely publicized 40-plus-billion-dollar valuation and potential IPO.
Similar class-action suits have now been brought against other "sharing economy" businesses that employ delivery people like Caviar and PostMates, arguing that none of these people should be considered contractors.
A settlement in a separate case on Friday against FedEx looks also to put a big dent in Uber's case. As the San Francisco Business Times reports, FedEx agreed to pay $228 million to 2,300 drivers in California for improperly categorizing them as contractors, and for short-changing them on benefits and pay. The court ruled that "because Fedex controlled the manner in which the drivers did their jobs, including scheduling, appearance and equipment requirements," the drivers had to be deemed employees.
