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Uber Drivers Ruled Employees

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Uber drivers protest against working conditions outside the company's office in Santa Monica

This is a huge decision.

In what could be an explosive decision, the California Labor Commission has found that a driver for Uber in San Francisco is an employee of the company. That’s from a ruling filed in state court on Tuesday and first reported by Reuters. It’s pretty damning. “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 commission writes. “The reality, however, is that Defendants are involved in every aspect of the operation.”

Why so huge?

Just as importantly, drivers who are contractors, and not employees, also aren’t required to get benefits and other labor protections that employees are traditionally awarded. For Uber and all its peers in the so-called 1099 economy, this is another key thing that helps to keep costs low, rides cheap, and thin margins viable.

Determining whether workers should be classified as contractors or employees is rarely a simple matter. Uber points to its drivers’ abilities to set their own schedules as evidence that they operate independently and shouldn’t be considered traditional employees. Drivers, on the other hand, argue that Uber sets strict standards for how many rides they need to accept while on the road, and how they ought to interact with passengers—and reserves the right to deactivate their accounts (basically, the equivalent of firing) if they don’t comply. In California, where the issue of whether drivers for Uber and its main rival Lyft are employees is headed to trial, U.S. district judges have in two separate rulings declined to make a final decision. “The test the California courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem,” one wrote.

So until now, the big, scary question—the one that could decimate Uber, and Lyft, and all the 1099 companies like them—has basically remained a hypothetical. Which is why it’s so important that the California Labor Commission has finally stepped in to say yes, this Uber driver is an employee, and she’s owed $4,000 in expenses. Imagine if Uber suddenly had to pay $4,000 back to all of its drivers in California, much less across the U.S. Even its $5.9 billion in funding would presumably wilt at the thought. It’s undeniable that Uber drivers becoming employees would be a huge blow to Uber’s business model. What we still don’t know is: How huge?

Effectively this entire industry is developed around a principle of labor exploitation. By forcing all of the costs of being an employee onto the worker, defining a worker as an independent contractor is part of the corporate toolkit to control workers’ lives without taking responsibility for them or having to pay into the social welfare net. Other tools include temp work (which today often means permanent work without benefits and multiple employees on the same Toyota shop floor in Kentucky working for different “employers.”), subcontracting, franchising, and outsourcing. Industries around the country have attempted to classify workers as independent contractors to avoid labor law and now we have seen new industries develop where this is the fundamental model. In all of these circumstances, the corporation at the top actually dictates terms of employment, often including hours and wages, or in the case of Uber, how many rides the drivers can accept. Moreover, Uber has full firing rights.

In other words, “disruption” actually means “finding new ways to exploit the working class.” Good for California for cracking down. Given the power of the Silicon Valley people in that state, we’ll have to see where this goes from here, but it’s a very promising decision.

Republicans know this too, which is why Grover Norquist thinks Uber is key for Republicans retaking the cities.

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