SAN FRANCISCO, CALIFORNIA (06/16/15) – Ultra popular Uber holds itself out as “just an app” that connects drivers and passengers. Its stated purpose is to create business between a psuedo-taxi service and members of the general public who are looking for a ride. Uber, a young company now worth an estimated $50 billion, operates in 58 countries and over 300 U.S. cities. However, its status as “just an app connecting people” is being challenged in a number of states (California, Florida, and Massachusetts are notable examples) regarding its practice of classifying its drivers to be independent contractors rather than employees.
As per Business Insider, a recent employee rights ruling against their so-called “independent contractor” scheme by the California Labor Commissioner’s Office deemed that Uber drivers are not independent contractors and should be treated as employees by Uber. In this particular case, Uber was ordered to reimburse a former driver for expenses and costs totaling over $4,000. While this Board ruling will not set a precedent like a court ruling does, it still erodes their credibility and chips away at Uber’s attempt to use thousands of people to work for them and deem themselves as “just an app.”
More and more Uber drivers are banding together and filing wage and hour complaints against Uber because they allege Uber demands that they act in an employee-like manner, yet will not classify them as such, which cheats them out of protections under labor law and benefits. By classifying drivers as independent contractors, Uber also dodges a considerable amount of taxes such as payroll and its fair share of Social Security and Medicare – shunting some of them off on the involuntary independent contractors. Several estimates agree that if Uber has to reclassify all of its U.S. employees, the cost will be in the ballpark of $209 million.
Uber says it will fight this decision, but, even if they win the battle in this particular case, it looks more and more like they are going to lose the war somewhere along the way because they are under fire for this business model from the federal government and several wage and hour boards in multiple states – and the number of lawsuits regarding this issue are growing rapidly.