Uber to appeal California ruling

NEWYORK /SAN FRANCIS-CO • California’s labour commissioner said an Uber Technologies Inc. driver who connects with customers through the company’s app must be considered an employee, a decision that strikes at the heart of its business model.

San Francisco-based Uber, like other “sharing economy” startups, has built a business around a flexible car fleet piloted by people it contends are independent contractors. If upheld, the decision might require the company to provide health insurance and guarantee a minimum wage — neither of which is required for contractors.

“We see this as a problem that’s growing larger with each year, with employees lacking security and even basic rights when they are treated as independent contractors,” said Steve Smith, spokesman for the California Labor Federation, which has backed tougher regulations on ridesharing companies.

Uber said in court papers it would appeal the decision. The resolution of the question in an economy that is the world’s seventh-largest may help define the future of Internet-enabled companies that depend on casual labour to provide car rides, shelter and even helicopter trips.

Uber has 22,000 drivers operating in San Francisco, 26,000 in New York and 15,000 in London, chief executive Travis Kalanick said in a speech to employees June 3 marking the fifth anniversary of the company.

The company has scrapped with regulators from Houston to Berlin on issues from whether Uber is required to follow existing taxi laws to how it handles rider data and even whether Uber cars can pick riders up at airports.

In May, the Florida Department of Economic Opportunity ruled that a former Uber driver was an employee of the company rather than a contractor, in a case over unemployment insurance.

Uber and its competitor, Lyft Inc., both face lawsuits questioning whether workers have legal protections of employees. While courts and regulatory agencies ponder, Uber has been expanding into hundreds of cities and raising money at a US$50 billion valuation, meeting resistance from regulators and cabbies as it goes.

Uber spokeswoman Kristin Carvell said in a prepared statement that the decision applied to a single driver and contradicted previous rulings.

Five other states have come to the conclusion that drivers were operating as independent contractors, she said.

“The No. 1 reason drivers choose to use Uber is because they have complete flexibility and control,” she said. “The majority of them can and do choose to earn their living from multiple sources.”

The ruling, filed in San Francisco state court Tuesday, stemmed from a dispute with a former driver. Uber claimed the driver wasn’t entitled to claimed wages or expense reimbursement. The commissioner disagreed.