The sharing economy has been having a rough ride lately: Enraged taxi drivers rose up against Uber with flaming street blockades in Paris and San Francisco cabbies rallied at Uber headquarters to protest the “ride-share” platform’s outsized grip on local taxi markets. But another potentially more disruptive development unfolded more quietly, in a San Francisco courtroom, with the simple words “alleged employee.” According to a California Superior Court filing last week (h/t Julia Carrie Wong at SF Weekly), the California Labor Commissioner’s Office decided Uber isn’t just a miracle of digital innovation in the public service: The app is actually a boss. In response to a complaint over disputed compensation, the commission determined that Uber’s relationship to the driver was not one between a consumer and a gig-enabling platform, or a company and an independent contractor, but, rather, employer and employee, based on the fact that the driving was integral to Uber’s business model, and Uber’s function was vital to the driver’s work.
Plaintiff’s work was integral to Defendants’ business. Defendants are in business to provide transportation services to passengers. Plaintiff did the actual transporting of those passengers. Without drivers such as Plaintiff, Defendant’s business would not exist.
The driver Barbara Ann Berwick wasn’t demanding much, winning about $4,150 in reimbursement for driving-related costs incurred during months of Uber service last year. Although the ruling, first issued on June 3 and subsequently appealed by the company, is limited, applying only to one case, it adds to a mounting stack of litigation against the company alleging exploitation of drivers as “independent contractors.” The legal pressure could lead to a shift in the $40 billion rideshare brand’s independent contractor–based business model, which has enabled it to avoid standard labor costs such as overtime pay, unemployment insurance, and Social Security.
According to Uber, that’s just part of the convenience: Users can instantly request rides and pay seamlessly via smartphone. But as the brand spreads worldwide, Uber not only grabs control over local consumer markets for ride services but upends an entrenched industry hierarchy. And though it’s true that many regular cabbies are legally categorized with the same dubious independent contractor designation, Uber’s monopolistic and ubiquitous software has opened new avenues of exploitation.
Against Uber management’s argument that the app was just a neutral service provider, the commission considered factors like the length and permanence of the service relationship and level of skill or supervision involved. Overall, the commission found, Uber could not treat drivers simply as users when they actually produced integral business value, through labor that Uber leverages by, for example, screening prospective drivers, controlling intellectual property use, and setting technical standards for vehicles. More importantly, the company tightly controls driver’s schedules and income. When a ride requester is a no-show or ditches the ride early, drivers aren’t guaranteed a cancellation fee, but Uber still reaps tidy profits.
Sarah Leberstein, staff attorney with the National Employment Law Project, says the recent legal and media scrutiny of the global brand reveals that “Uber is…deriving their profits by maintaining this ongoing relationship with this fleet of drivers over whom they have many controls. They’re essentially determining how much the drivers are making because they’re setting the fares and determining what share that drivers get.”