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California: Uber driver an employee, not a contractor

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in Employment Law,Human Resources

Sharing-economy employers, take note: Your innovative business model doesn’t mesh well with traditional interpretations of employment law. The latest evidence: The California Labor Commissioner’s determination that an Uber driver is an employee, not an independent contractor.

The decision, which the ride-hailing company has appealed, said a San Francisco driver was entitled to more than $4,000 in toll and mileage reimbursements because her work was “integral” to Uber’s business.

The degree of control an employer exerts determines whether a worker is an employee or a contractor. The greater the employer control, the more likely the worker is an employee.

The commission said Uber “is involved in every aspect of the operation” its drivers carry out. It provides the smartphone app drivers use to connect with customers, handles billing and retains the authority to cut off drivers who don’t work enough hours or who earn poor customer ratings.

On the other hand, Uber drivers work when they choose to and are free to accept or reject fares. They provide their own vehicles and pay for gas and insurance. Uber keeps 20% of each fare, plus a $1 service charge.

The labor commissioner’s determination affects just one driver. In March, however, a federal judge in San Francisco OK’d a class-action suit in which hundreds of Uber drivers argue that they are employees. A loss could force Uber to pay for health insurance and make it liable for unemployment and workers’ compensation benefits.

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