California Says Uber Driver is an Employee, Not an “Independent Contractor”

Yesterday, Uber appealed a California Labor Commission ruling that held an Uber driver was not an independent contractor, but an employee of Uber.  $4,152.20 in backwages is insignificant when compared to the broad implications of reclassifying Uber drivers as employees.

The ruling is in striking contrast to Uber’s long-held proclamation as a “logistics” or a “lead generating” service that simply connects independent contractors to consumers desiring those services.

A similar ruling here in Washington State could have a major impact on Uber operations here. The Washington State Supreme Court tackled the independent contractor v. employee issue recently in Anfinson v. FEDEX Ground Package System, Inc., 281 P.3d 289 (2012) in adopting the FLSA (“Fair Labor Standards Act”) “economic reality” test[1] for deciding whether an individual is an employee or an independent contractor.[2] The test largely focuses on the degree to which an employer asserts control over the worker. Should a similar ruling to California’s be adopted here, Uber would need to dramatically revise its business model.

[1] The Court referring it to also as the “economic dependence” test.

[2] See also: Bonnette, 704 F.2d at 1469-70 (Home health care workers jointly employed by social service agencies); Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748, 755-56 (9th Cir. 1979) (licensor of patented strawberries may have jointly employed strawberry growers, where it could control important growing and marketing decisions).