Getty Images

The California Labor Commission has ruled that one of Uber’s San Francisco-based drivers is, in fact, an employee and not a contractor as the ride-hailing company previously asserted. In the past, Uber has argued that it was merely a “neutral technology platform" that links potential drivers up with passengers in need of a ride.

In claiming that each of its drivers are technically independent contractors, ” Uber was not legally required to provide common workplace benefits like social security, insurance, and workman’s comp. This has translated to a net profit for Uber as a business, but many workers’ rights advocates claim that Uber’s success comes at the cost of driver security.

The commission's decision and the pending decisions from a number of other lawsuits against Uber could seriously hurt the company going forward. Though Uber’s currently valued at about $50 billion, much of that speculation into the company’s success is contingent on its current business model that doesn’t account for employee-related spending.

Uber is known for advertising that its drivers can make anywhere from $500 to $5,000 per month depending on the city and how many rides a driver is willing to take on. Claims that some Uber drivers were pulling in over $90k per year drew skepticism from the public last year, leading to a wave of investigative pieces that revealed a more complicated story.

Advertisement

While it’s possible to make about $20 an hour driving for Uber, that figure doesn’t take into account a number of the expenses drivers are expected to cover on their own like car upkeep, toll fees, gasoline, and in some cases, car insurance.

Earlier this year, Uber made a point of highlighting a deal it inked with a number of insurance companies nationwide to strengthen the coverage of its auto insurance, but as Timothy B. Lee pointed out for Vox, drivers were previously left in a legal grey area that left them somewhat vulnerable.

"The Labor Commissioner's ruling could be a great help to our case," Shannon Liss-Riordan, the lawyer currently suing a number of "on-demand" startups for shortchanging their workers, told Fusion. "The Labor Commissioner ordered Uber to reimburse the driver at issue in that case several thousand dollars in expenses for the short period she worked for Uber (several months)."

Advertisement

The Labor Commission’s ruling was handed down in response to Uber’s move to appeal a 2014 decision that awarded Barbara Ann Berwick, an Uber driver in San Francisco, $4,000 for work-related expenses she incurred while driving for the service for only two months.

"The California Labor Commission’s ruling is non-binding and applies to a single driver," Uber said in a prepared statement soon after news of the decision broke. "Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’"

Uber could not be directly reached for comment about the decision by the time of posting.