A California Labor Commissioner has ruled that a former Uber driver was an employee of the ride-hailing behemoth, not an independent contractor, citing multiple examples where the company had acted more like an employer than the neutral “technology provider” it has long claimed to be. “The reality … is that defendants are involved in every aspect of the operation,” the Labor Commissioner’s Office wrote.
When the news broke yesterday, reporters were quick to magnify the scope of the ruling: “If Uber drivers are employees, that opens Uber up to higher costs, including Social Security, workers’ compensation and unemployment insurance,” wrote the Guardian. “That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services.”
Actually, the ruling does not apply to all the tens of thousands of Uber drivers working across California (Los Angeles and San Francisco drivers combined total at least 35,000). It is only applicable to Barbara Ann Berwick, the single defendant in the lawsuit. And it could fall apart if Uber’s appeal succeeds. The company is not about to begin doling out thousands of health insurance cards, nor is it about to commit to the strict regulations of California’s taxi industry.
Still, Berwick’s re-classification as an employee, with the distinct rights that accompany that designation, is a significant step for workers who lack the protections of full-time employment. Like Uber, other “1099 economy” services such as Lyft, Instacart, and Homejoy rely on herds of independent contractors, which allows for a kind of accountability gap between worker and corporate entity. When serious questions of liability arise, or when there simply aren’t enough hours to go around to provide fair wages to all, the corporation throws up its hands.
The model extends to brick-and-mortar workplaces, too. Both Amazon and Walmart have been criticized (and sued) for wage theft of the sub-contracted warehouse workers who package and ship goods expressly for those companies. Elsewhere, the staggering rise of erratically scheduled, part-time employment in retail, food service, and other industries has wreaked havoc on workers’ ability to predict their wages from week to week.
It’s often been said that the “1099 economy,” in which workers are expected to give up protections in exchange for “flexibility,” is the future of work. But the Uber ruling implies that old classifications like “contractor” don’t always fit these arrangements, and that they shouldn’t necessarily preclude workers from certain rights. Other recent decisions and campaigns suggest something similar. Last year, the National Labor Relations Board ruled that McDonald’s should be treated as a joint employer with its franchisees. In recent class-action lawsuits, judges have found reason to list corporations like Walmart as joint employers of sub-contractors, as well.
“Subcontracting, contracting, temping—all of these models create a distance between the corporate entity and the workers,” says Tony Perlstein, campaigns co-director at the Center for Popular Democracy, a pro-worker think tank in Washington, D.C. “But we are seeing these relationships and legal infrastructure get called into question. There is a growing consensus that it doesn’t work.”
Much remains to be seen. Uber will fight this ruling and others like it, as will companies like McDonald’s and Walmart. But Saba Waheed, research director of UCLA’s Labor Center, is optimistic about the effect the Uber decision could have.
“It’s pushing the conversation,” she says. “If this is the direction that work is going, these companies have to recognize they’re working with a workforce now. And that means you have certain responsibilities.”