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Why the California 'Uber' ruling matters

Earlier this month, the California Labor Commission announced its ruling in a case that will likely result in consequences far beyond the immediate scope of the parties involved. Specifically, the commission ruled that an Uber driver based in California is an actual employee of the company, not “simply” a contractor. Although this seems like a straightforward and narrow ruling, it could have wide implications.

Oftentimes, employers either consciously or unconsciously skirt the boundaries of wage and hour laws by misclassifying employees as contractors. When this kind of misclassification occurs, businesses avoid paying taxes to the government and certain benefits to the affected workers.

According to BBC News, Uber insists that the recent ruling only affects the specific driver involved in the case. The company released a statement drawing the media’s attention to the fact that similar cases have been decided in favor of labeling drivers as contractors. The company then explains that the kind of flexibility that Uber drivers enjoy could not necessarily be enjoyed by employees, as opposed to contractors.

Contractors may enjoy some forms of flexibility. However, they also have fewer protections, fewer benefits and higher operating costs than employees do generally. One of the issues that swayed the commission in regards to this recent case is that even though drivers pay for nearly all costs of operating their jobs, Uber is involved in “every aspect of the operation” in question. This observation suggests that true contractors have far, far more flexible operations than employees do.

Uber is appealing this recent decision. However, the fact that the high-profile California Labor Commission has determined that at least one Uber driver is entitled to the benefits and protections extended to employees indicates that the issue of potential misclassification by employers is one that may be scrutinized in favor of workers moving forward.

Source: BBC News, “Uber dealt blow in California over 'employee' driver,” June 17, 2015

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