The California Labor Commission ruled that Uber drivers are employees and not independent contractors, clarifying the status of ride-sharing drivers. Uber filed an appeal with the California Superior Court.
“An adverse ruling emboldens plaintiffs attorneys to file class actions and seek to clarify classes [of drivers] in multiple states. They could also bring a collective action under federal law for Fair Labor Standards Act violations, which has a whole separate set of remedies for noncompliance,” said Jim Evans, partner in Alston & Bird’s Labor and Employment Group.
Uber’s success has, in part, resulted from its distanced relationship with its drivers. By classifying its drivers as independent contractors it has cut many costly corners of labor law, like not having to pay for Social Security and unemployment insurance or compensate drivers for overtime and breaks. As independent contractors, drivers have had to front expenses like vehicle maintenance and gasoline. If drivers are deemed employees, all those costs will have to be repaid, Evans explained.