Uber Drivers as “Independent Contractors” – Maybe Not!

By Doug Towns

Employers face a variety of challenges when relying on “independent contractors.” Typically these disputes involve wages and/or hours worked or alleged entitlement to benefits. A recent case against Uber, however, brought a different issue into focus – – what expenses must be reimbursed by the employer.

In Uber Technologies, Inc. v. Berwick, No. 11-46739 (Cal. Lab. Comm’n June 3, 2015), an Uber driver, Barbara Anna Berwick, argued that she should be reimbursed for various expenses, including tolls and parking tickets, associated with her personal car that she used to carry Uber customers. Contending that the driver was an independent contractor, not an employee, Uber argued she was not entitled to reimbursement for these expenses under California law.

Despite Uber’s contention that it exercised very little control over the driver, the California Hearing Officer observed that Uber “retained all necessary control over the operation as a whole” and that Uber is involved “in every aspect of the operation.” Specifically, even though the driver owned the car, the Hearing Officer noted that:

  • the company reviews all prospective drivers and issues guidelines regarding the cars the drivers must use;
  • the company monitors the drivers’ approval ratings and terminates their access to the app if the ratings fall below Uber’s standards; and
  • Uber sets or negotiates passengers’ fees for service.

Ultimately, the Hearing Officer concluded that Uber is “in business to provide transportation services to passengers [and that] Plaintiff did the actual transporting of those passengers. Without drivers such as Plaintiff, Defendants’ business would not exist.” Therefore, Uber was found to be liable under California law for approximately $4,100 in expenses plus interest.

Although the California Labor Commissioner was careful to note that the decision only applied to the individual claimant, the case is yet another example in the rising tide of litigation challenging employers that rely on independent contractors.

Sherman & Howard L.L.C. has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation and does not create an attorney-client relationship between any reader and the Firm.

©2015 Sherman & Howard L.L.C.                                                                                 June 24, 2015