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How CA Labor Commission’s Uber decision impacts nascent ‘e-hail’ industry




In this photo illustration, the new smart phone app 'Uber' logo is displayed on a mobile phone next to a taxi on July 1, 2014 in Barcelona, Spain.
In this photo illustration, the new smart phone app 'Uber' logo is displayed on a mobile phone next to a taxi on July 1, 2014 in Barcelona, Spain.
David Ramos/Getty Images

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A state court in the County of San Francisco has ruled Uber driver Barbara Ann Berwick is an employee, not a contractor.

Anyone familiar with employment laws and business models can tell you the distinction is huge. Whereas employees have strict protections, are reimbursed for expenses such as gasoline and insurance, and obtain partial coverage of Social Security and Medicare taxes, contractors are exempt from many of these employment requirements.

For Uber, the distinction could potentially disrupt their $50 billion business model, although so far the ruling is only in California and will likely be appealed for years to come.

Are all Uber drivers employees and not contractors? How will this ruling affect Uber’s business model on a national and international level? Could this lead to a movement for Uber drivers to unionize? And with Uber under increasing regulation from airports and states to the federal government and other countries, can it sustain its breakneck growth?

The following is an official statement from Uber regarding the ruling:

“Reuters’ original headline was not accurate. The California Labor Commission’s ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’ Five other states have also come to the same conclusion. It’s important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control. The majority of them can and do choose to earn their living from multiple sources, including other ride sharing companies."

Guests:

Carolyn Said, business and technology reporter for the San Francisco Chronicle, she covers the so-called “sharing economy” for the paper

Matthew Feeney, a policy analyst at the Cato Institute, a libertarian-leaning think tank in Washington, D.C.

Shannon Liss-Riordan, attorney at Lichten & Liss-Riordan in Boston, Mass. She is representing drivers in two separate lawsuits in San Francisco -- against companies that belong to “sharing economy”