Why it matters

A California Labor Commissioner has ruled that an Uber driver seeking reimbursement from Uber for expenses such as tolls and mileage incurred was an Uber employee, and not an independent contractor, and has ordered Uber to pay driver Barbara Ann Berwick approximately $4,000. Uber argued that the ride-sharing company did not exercise the requisite control necessary to make Berwick an employee. But the Labor Commissioner’s Office concluded that Uber vetted her as a prospective driver and provided her with an iPhone. “Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” according to the order. “The reality, however, is that defendants are involved in every aspect of the operation.” The decision became public when Uber filed an appeal in California state court; the company issued a statement emphasizing that the hearing officer’s conclusion was limited in application to Berwick and was otherwise nonbinding. However, the decision could have major implications for the ride-sharing industry as a whole—encouraging other drivers to bring suit, as well as other industries based on similar staffing models.

Detailed discussion

Barbara Ann Berwick began working as an Uber driver in July 2014. When she stopped working just a few months later, she filed a claim with the California Labor Commission seeking wages and reimbursement of expenses she incurred while driving for Uber.

A hearing officer conducted a hearing during which Berwick testified that, over 49 days, she drove for approximately 470.70 hours, paid bridge tolls of about $256, and drove roughly 6,468 miles. She also provided a copy of the written agreement between the parties, which set forth the requirements to be a driver (passing a background and DMV check and purchasing liability insurance coverage of $1 million, for example).

Uber presented testimony that the company consists of a technological platform and a smartphone application that facilitates private transactions between private vehicle drivers and passengers. The company exerted no control over the hours Berwick worked, Uber said, and did not geographically restrict her driving.

But Hearing Officer Stephanie Barrett concluded that the evidence, in her view, demonstrated that Berwick was an employee, not an independent contractor.

Relying on a similar case brought by cab drivers, Barrett stated that the overriding factor when considering the question was whether the individual performing the work was engaged in an occupation or business distinct from, or integral to, that of the company utilizing the individual’s services.

“Plaintiff’s work was integral to Defendants’ business,” the officer wrote. “Defendants are in business to provide transportation services to passengers. Plaintiff did the actual transporting of those passengers. Without drivers such as Plaintiff, Defendants’ business would not exist.”

Despite Uber’s contention that it exercised very little control over Berwick’s activities, the degree of control was not dispositive, Barrett said. “By obtaining the clients in need of the service and providing the workers to conduct it, Defendants retained all necessary control over the operation as a whole,” she wrote.

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” the officer said. “The reality, however, is that Defendants are involved in every aspect of the operation. Defendants vet prospective drivers, who must provide to Defendants their personal banking and residence location, as well as their Social Security number. Drivers cannot use Defendants’ application unless they pass Defendants’ background and DMV checks.”

Uber also controls the tools the drivers use, Barrett added, requiring drivers to register their cars, and monitoring their passenger approval ratings, with the threat of termination if their rating falls below a specific level. Barrett also observed that drivers did not pay Uber to use its intellectual property, that Uber alone had the discretion to negotiate cancellation fees with the passenger, and that Uber discouraged drivers from accepting tips “because it would be counterproductive to Defendants’ advertising and marketing strategy.”

Because Berwick was an employee, the hearing officer concluded that Uber was required to indemnify her for all that she had spent in the discharge of her duties, pursuant to Labor Code Section 2802. That included toll charges of $256 and mileage at a rate of $0.56 per mile for 6,468 miles, or $3,878.08. With interest, the total amount was $4,152.20.

Barrett declined to award unpaid wages or liquidated damages, finding that Berwick failed to provide the required evidence to support her claim for additional wages, such as any record of payment information from the defendants.

Uber has already appealed the decision to the California Superior Court.

To read the California Labor Commissioner’s decision in Berwick v. Uber Technologies, click here.