Uber Versus The World: Should Drivers Be Official Employees?

Th Uber Technologies Inc. car service application (app) is demonstrated for a photograph on an Apple Inc. iPhone in New York, U.S., on Wednesday, Aug. 6, 2014. For San Francisco-based Uber Technologies Inc. which recently raised $1.2 billion of investors' financing at $17 billion valuation, New York is its biggest by revenue among the 150 cities in which it operates across 42 countries. The Hamptons are a pop-up market for high-end season weekends where the average trip is three time that of an average trip in New York City. Photographer: Victor J. Blue/Bloomberg via Getty Images

Photo: Getty Images

Uber recently celebrated its 5th anniversary. The start-up that connects drivers with passengers like a taxi service has certainly disrupted the existing order, and has reaped enviable profits in the process. The company recently took on a $1.4 billion growth investment, and has been valued at $50,000,000,000.00. (That’s $50 billion in case you didn’t want to count the zeros. How often do you actually get to write out $50 billion, though? I couldn’t resist).

Unfortunately for Uber, last week the California Labor Commission handed them a bit of an unsavory anniversary present. The commission was deciding whether Barbara Ann Berwick, one of Uber’s 22,000 San Francisco drivers, should be reimbursed for expenses she had accumulated over the course of driving – bridge tolls, gas, etc. To do so would imply that Berwick was a fully fledged employee of Uber and not, as the company maintains, an independent contractor.

See, Uber describes itself merely as an app to connect willing drivers with passengers. Uber CEO Travis Kalanick likes to say that they are a marketing service for the drivers, helping drivers obtain leads. They are not an actual taxi service, they don’t control the hours that their drivers work, there isn’t a dress code, drivers can come and go as they please. Berwick and labor activists argue, however, that drivers are integral to Uber’s business – no drivers, no Uber – and therefore under California law they should be considered employees.

So, the California Labor Commission furrowed its bureaucratic eyebrows and decided that Berwick should be considered an official employee, and was entitled to about $4,000.00 in reimbursement. Uber, not surprisingly, is hoping to exchange this unwelcome anniversary gift and is appealing the ruling.

For me, a couple questions came to mind when I heard about this: first off, why now? Uber has, after all, been up and running for five years. It operates in 311 cities across 58 countries, has a driver corp in the tens of thousands, is believed to take in $2 – 4 billion monthly (since it’s a private company we can’t know for sure), AND has managed to piss off a lot of people in the process. From sabotaging rivals, to walking over regulators, to facing ethical controversies (for example, one of its executives suggested the company should find dig up dirt on critical journalists), the company hasn’t exactly kept a low profile.

The answer: it appears that this was simply a matter of someone getting the gumption to take them on. Berwick filed the lawsuit last September, and when it comes to litigation this is hardly her first rodeo. The New York Times reports that since 1991, she has filed 20 lawsuits over various matters.

Another question is, how does this affect Uber as a company? Does this mean that everyone who currently drives for Uber is now officially an employee?

Nope. The ruling only applies to Berwick. One lawsuit for one driver. The problem for Uber, though, is if a multitude of other drivers start to feel lucky and bring similar charges against the company. Uber wants the decision struck down so that other drivers can’t rely on this ruling to set a precedent for their case. And, it should be noted that Uber has prevailed in at least five other states where it faced similar employee-or-independent-contractor cases, so this ain’t their first rodeo, neither.

But ultimately the biggest question amidst this debate is: should Uber drivers be considered employees?

There are pluses and minus to both sides.

Designating them as actual employees would mean that Uber drivers would be entitled to reimbursement for gas, bridge tolls, some car upkeep. They would also receive workers compensation and health insurance benefits. All good things, of course.

On the other hand, many current drivers like their independent contractor status just fine. Working in this way means that drivers have complete flexibility over their hours. They can work as much or as little as they want, with many making enough money to maintain their lifestyle while having time for other projects. They can deduct gas and toll receipts from their taxes and don’t have to wear a stuffy uniform. An official employee status would likely mean a much more rigid work schedule, defeating the much of the appeal of driving.

At this point it’s in the hands of a California Superior Court. With the rise of similar “on-demand” companies offering independent contract workers for everything from home upkeep (Handy) to grocery delivery (Instacart), ultimately the best outcome for this would be a national standard for regulating this new, super agile worker-business relationship.

But since this would literally take an act of Congress, and seriously who has any faith in them to do anything, Civinomics puts the question to you: Should Uber drivers be considered official employees? Vote and comment below.


Should Uber Drivers Be Official Employees?

The hugely successful taxi-app company, Uber, recently suffered a defeat when the California Labor Commission ruled against it in a case brought by one of its drivers, Barbara Ann Berwick. Berwick contended that Uber should reimburse her for expenses such as bridge toll and gas, like it would if she were an official employee. Currently, Uber hires its drivers as independent contractors, saying that it is merely an app that connects willing drivers with passengers. The commission ruled that Berwick should be considered an employee, and Uber has promised to appeal the decision. Should Uber drivers be considered official employees?

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