A recent ruling by the California Labor Commissioner’s Office says that a driver for Uber Technologies, Inc. (Uber) should be classified as an employee, rather than an independent contractor, and is therefore entitled to reimbursable expenses. Uber has appealed the ruling.
What Is Uber?
Uber is a smart-phone application (app) that private vehicle drivers and passengers use to facilitate private transactions. Uber provides administrative support to the passengers seeking a ride and the drivers providing transportation. A driver uses the app to notify passengers that he or she is available to transport them. A passenger uses the app to request a ride. When the driver accepts the request, photos of the car and driver appear on the passenger’s phone so that the passenger can identify his or her ride. Basically, it allows someone to use a smart phone to hail a taxicab.
Driver Claims She Was Owed for Expenses
Barbara Berwick worked as a driver for Uber under a written agreement from approximately July 23, 2014, to September 18, 2014. She claimed that she was entitled to reimbursement for expenses associated with all of the miles she drove as an Uber driver, along with charges for tolls, use of her cell phone, and parking violation fines. Uber argued that they did not exert any control over the hours Berwick worked, so she was an independent contractor.
Drivers Are Integral Part of Business
Pursuant to prior case law, the employer has the burden of proving that the persons whose services it has retained are independent contractors rather than employees. There is a presumption of employment (see Cal. Lab. Code §3357).
Uber argued that it exercised very little control over Berwick; however, prior case law establishes that complete control over a worker’s activities is not necessary for a worker to be classified as an employee. According to the 1989 California Supreme Court decision S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, “The modern tendency is to find employment when the work being done is an integral part of the regular business of the employer, and when the worker, relative to the employer, does not furnish an independent business or professional service.” Here, Berwick’s work was integral to Uber’s business. Uber is in business to provide transportation services to passengers, and Berwick did the actual transporting. Uber’s business would not exist without drivers.
Issue of Control
Though Uber claims it is a neutral platform, the Labor Commissioner found that it is involved in every aspect of the operation. Uber vets prospective drivers, and drivers cannot use the Uber app unless they pass required background and DMV checks and also submit certain personal information. Uber also controls the tools the drivers use. Cars cannot be more than 10 years old, and Uber monitors drivers’ approval ratings from passengers. A driver’s access to the app is terminated if his or her rating drops below a certain level. Passengers pay Uber a set price for the trip, and Uber pays the drivers a non-negotiable service fee. Uber discourages drivers from accepting tips.
According to the Labor Commissioner, Berwick’s car and labor were her only assets. Her work did not involve any managerial skills that could affect profit or loss. Berwick did not have any investment in the business (aside from her car). But for the app, provided by Uber, Berwick would not have been able to perform the work.
Therefore, Berwick was classified as an employee, and was due to be reimbursed by Uber for all of the miles she drove and tolls she paid, as required by state law (see Cal. Lab. Code §2802). Because Berwick did not establish that she incurred cell phone charges or a parking ticket due to Uber, she was not entitled to be reimbursed for those expenses.
Lia Coniglio, Esq., is Manager of State Payroll Information Resources for the APA. Paytech Oct 2015