Uber has suffered another in a string of legal setbacks, with a California agency ruling that a driver was an employee of the company, rather than an independent contractor.
The California Employment Development Department decided that an unnamed driver has the right to receive unemployment benefits, and that there is a clear employer/employee relationship between the startup and its drivers.
As Reuters reports, the ruling pointed out Uber has full discretion over fares, can impose cancellation fees on drivers, and can suspend drivers from the app as reasons why those driving should be classed as employees.
“The evidence showed a distinct and strong right to control by the appellant Uber in the manner and means in which these services were provided,” the ruling said.
The ruling was made in April last year, but was only recently made public by a lawyer that is now representing another driver suing Uber.
Uber hasn’t been having a great run as of late, with many legal decisions going against its strong belief that drivers are independent contractors because they like to be their own boss.
It’s a major sticking point of the shared economy in general too, and these decisions could have far reaching consequences for countless startups that operate under a similar model.
The documents also show that Uber appealed the decision twice but was unsuccessful, and is now shifting its focus as to why it won’t impact the company’s operations.
So far eight states in the US have seen similar rulings, and a class action currently going down in California could be Uber’s biggest legal fight to date.
Raising your first round of capital? Starting a crowdfunding campaign? Want to grow your business with Instagram? StartupSmart School can help.
Denham Sadler is a former editor of StartupSmart. He was previously a journalist at the publication and has worked as a freelancer for the Guardian, the Saturday Paper and the ABC. In his spare time he likes puns and jaffles.
Comments