On September 16, 2014, an Uber driver named Barbara Ann Berwick filed a wage complaint with the California Labor Commissioner. Among other things, Berwick sought reimbursement for outstanding business expenses, namely for gas and bridge tolls. Uber argued that Berwick was not an employee and was therefore not entitled to reimbursement of business expenses. The California Labor Commissioner disagreed and ultimately awarded Berwick over $4,000 in business expenses and interest.
In arriving at its decision, the Labor Commissioner applied the “economic realities” test adopted by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations. From that case, the Commission laid out the eleven-factor test for determining whether a worker is an employee or independent contractor:
- whether the worker is engaged in an occupation separate and distinct from that of the principal
- whether the work is part of the regular business operations of the principal
- who provides the tools, materials, and equipment for performing the work
- whether the worker has invested in any equipment or materials to perform the work
- whether the work requires a special skill
- whether the work being done is of the kind that doesn’t require direction or supervision by the principal
- whether the worker has an opportunity for profit or loss in the business
- how long the services are to be performed
- how permanent the relationship is
- how the worker is paid, whether by the hour or by job, and
- whether the parties believe that they have created an employment relationship (although this factor is not determinative).
Based on this multifactor test, the Labor Commissioner held that Berwick was in fact an employee. The court emphasized that the drivers were not involved in an occupation that was separate and distinct from Uber’s core business. In fact, the drivers are an essential component to Uber’s regular business operations. The Commissioner also found that Uber provided iPhones to their drivers, monitored their approval ratings by customers, and deactivated their accounts if they were inactive for 180 days or if their approval ratings fell below 4.6 stars. Uber also had sole discretion to set and negotiate the prices that customers would pay. And, the service – driving customers around – didn’t require a special skill.
The Labor Commissioner was not persuaded by Uber’s arguments that it didn’t exert much control over the drivers – for example, drivers could set their own hours, were not supervised on the job, and could refuse to accept customers. However, the Commissioner found that Uber still had a strong hold over the operation as a whole, and the nature of the work made detailed control over the drivers unnecessary. As a result, Berwick was an employee and not an independent contractor.
The independent contractor analysis is an individualized test, applied to each worker who claims that he or she was misclassified. In other words, the Commissioner’s ruling for Berwick doesn’t necessarily mean that all Uber drivers in California are employees as well. However, it stands to reason that if Uber treated its other drivers the same way it treated Berwick, it could have hundreds, if not thousands, of similar potential claims. As you might expect, Uber has appealed the Commissioner’s decision.
https://www.nolo.com/legal-encyclopedia/california-labor-commissioner-rules-uber-driver-employee-not...
