California Labor Commissioner Rejects Former Uber Driver’s “Independent Contractor” Status

Insights California Labor Commissioner Rejects Former Uber Driver’s “Independent Contractor” Status Scott Raber · June 22, 2015

On June 16 San Francisco-based rideshare service Uber Technologies filed notice that it intends to appeal a decision issued by the California Labor Commissioner earlier this month, which determined that a former driver should have been classified as an employee, not an independent contractor. The driver, Barbara Berwick, sought unpaid wages, expenses, and penalties under California law.

The Labor Commissioner evaluated Berwick’s employment status using multiple criteria developed by California courts over the past three decades.  Those criteria include, among others, whether or not the work is a part of the regular business of the principal or alleged employer; whether the principal or the worker supplies the instrumentalities, tools, or place for the person to do their work; whether a special skill is involved; whether the work is done under the direction of the principal or by a specialist without supervision; the length of time the services are to be performed; the degree of permanence of the working relationship; and the degree of control exerted over the laborer by the employer.  Rejecting evidence offered by Uber, the Labor Commissioner found that, on balance, Uber asserted enough control over her work and “every aspect of [its] operation” that Berwick was properly characterized as an Uber employee (despite the parties’ written agreement to the contrary.)

The Labor Commissioner awarded Berwick reimbursement for miles driven, as a reimbursable expense necessarily incurred in the course of her employment, plus interest ($4,152 in total)—but did not award her unpaid wages or overtime.  Curiously, Berwick offered no evidence suggesting that Uber had failed to pay her or her corporation, Berwick Enterprises, in full under the independent contractor agreement.  And, it will be interesting to see what, if any, effect the remittance of payments to Berwick’s corporation has on the Superior Court’s review.

The ruling has garnered far more attention than is typical for a Labor Commission decision: Berwick is but one claimant, and Labor Commission decisions have minimal precedential value.  But Uber is no ordinary employer given the fundamental importance of “independent contractors” to its business model, its self-characterization as being merely a “technological platform,” and the aggressive stance it has taken on the independent contractor/employee debate amid other pending class action challenges to its classification practices.  Moreover, the ongoing independent contractor/employee debate affects companies all over the country that are operating with equally questionable labor models.

Employers and employees—and the attorneys advising them—would undoubtedly benefit from renewed legislative attention that revisits the various, aging “multifactor” tests for employer-contractor classification, with an eye towards 21st century technology and work patterns.  Until that occurs, the Labor Commissioner’s recent ruling confirms that, at least in California, governmental authorities will continue to apply close scrutiny to independent contractor agreements against the practical realities of workers’ labors, and the general presumption of employment—with the stated interest of preventing the sorts of abuses the employment laws were designed to prevent.