The Uber phenomenon has been catching fire over the last few years with many people jumping on it as a means to make a living or extra money.  I have some friends who have signed up to be Uber drivers, just as a means to make some extra money.  I always thought these people to be independent contractors but this view, this world, may have just been totally turned upside down.

This is because the California Labor Commission has ruled that an Uber driver is an employee, not an independent contractor and thus the Company’s entire business model is thrown into turmoil.  The case is entitled Uber Technologies Inc. v. Berwick, filed in the Superior Court of California, as an appeal from the Commission decision.  The ruling (awarding the plaintiff payment for business expenses, e.g. tolls, mileage) may mean that Uber might have to give these “employees” health insurance and other benefits, which could radically disrupt the manner in which Uber does business.

Copyright: cculverimaging / 123RF Stock Photo
Copyright: cculverimaging / 123RF Stock Photo

The Company argued that it did not control the individual and she could work or not, as she pleased.  The Commission ruled that the Company acted like an employer when it supplied the person with an iPhone to be able to access Uber’s smartphone app.  The Company also screened potential drivers.  The Commission found that the Company held itself “out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.  The reality, however, is that defendants are involved in every aspect of the operation.”

The Company asserted that this decision conflicted with another Commission decision finding an Uber driver was not an employee and it also conflicted with similar positive decisions in Georgia, Pennsylvania, Colorado, Texas and Illinois.

The Takeaway

The element of control is not the only factor considered in the totality of the circumstances analysis that is the independent contractor test.  For example, if an individual (as could be argued by the Commission herein) is performing a service integral to the business, this is an indicator that the worker is an employee.

A commentator has suggested that perhaps there will emerge from this cauldron is a hybrid form of employment relationship, not a true employee, not a true independent contractor, but somewhere in the middle.  In this regard, there are also currently class actions against Uber pending in federal court, so (assumedly) the federal courts will have input on this crucial issue.

I am not sure about the hybrid definition, unless it emanates from Congress, so as to ostensibly apply to the entire country.  These independent contractor cases are extremely fact sensitive and the Commission or a court can reach different decisions on different individuals.   For employers engaging so-called independent contractors, my advice is to try to ensure that they are in their own business, that they have the indicia or trappings of being in their own business (e.g. incorporated, have other customers/clients, etc.) in addition to not being controlled by the putative employer.

Easier said than done…