Back on May 27, 2015, it was reported here that Uber Technologies Inc. was being sued for stealing their business concept ("Business litigation filed by California man alleging idea theft"). Apparently, this was not the only legal entanglement with which Uber is faced. Employee contract disputes were taken to the California Labor Commission.
Uber was classifying drivers for the smartphone ride sharing service as contractors. The drivers, however, insisted that they were employees, and the California Labor Commission recently agreed. The company argues that the ruling would force the company to raise its prices for consumers because they would then be obligated to purchase workers' compensation insurance and unemployment insurance, along with other costs the company does not currently pay.
Uber further argues that the drivers control their schedules and are free to work for other companies. The commission, however, says that the company exerts enough control over the drivers -- since it is involved in all aspects of the operation -- that they are considered to be employees. Uber is appealing the ruling and will not have to comply with it during that process.
This is not the only instance in which Uber's drivers are seeking to be classified as employees. Drivers here in California have filed contract disputes in federal court as have drivers from other states. The outcome of this particular appeal could have ramifications for other companies in California who function in a similar manner. The leaders of these companies may want to seek legal advice.
Source: Reuters, "In California, Uber driver is employee, not contractor", Sarah Mcbride and Dan Levine, June 17, 2015