Latest in Breaking news

Image credit:

California labor commission rules Uber drivers are employees (update: Uber responds)

4 Shares
Share
Tweet
Share
Save

Sponsored Links

The California labor commission has ruled that an Uber driver qualifies as an employee, not a contractor, of the company. As a result Uber will have to reimburse a driver for expenses accumulated in the line of duty. That includes $256 in tolls and the IRS rate of $0.56 per mile for use of a personal vehicle for business purposes. But the total award of $4,152.20 is not what scares the company, that's pocket change seeing as how it was recently valued at roughly $50 billion. No, the king of cars-for-hire is afraid of the broader implications. If their current network of over one million drivers suddenly became employees, running the business could get a lot more expensive. For one, companies need to pay social security, payroll and medicare taxes for their employees. And it could have implications for the expectation of health or retirement benefits and even leave Uber vulnerable to renewed pressure from taxi unions.

Of course, Uber is appealing the ruling and could keep this issue tied up in court for sometime. Plus, this ruling only applies in California for the time being, but it could be an omen of more trouble waiting on the horizon.

[image credit: AP Photo/Eric Risberg]

Update: Uber posted the following statement clarifying that the ruling applies to a single driver, not its entire network of contractors.

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.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
4 Shares
Share
Tweet
Share
Save

Popular on Engadget

Engadget's 2019 Back-to-School Guide

Engadget's 2019 Back-to-School Guide

View
Hideo Kojima debuts six-minute 'Death Stranding' gameplay video

Hideo Kojima debuts six-minute 'Death Stranding' gameplay video

View
NVIDIA's game streaming service comes to Android this fall

NVIDIA's game streaming service comes to Android this fall

View
Study finds US carriers aggressively throttle video streams

Study finds US carriers aggressively throttle video streams

View
Two Halo characters are joining ‘Gears 5’

Two Halo characters are joining ‘Gears 5’

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr