Regulations

California Labor Ruling Could Be Start Of Cost Shift For Uber

Posted on June 23, 2015

Colleen McCarthy is a Partner in the Employment Law Practice Group Of Ferruzzo & Ferruzzo, LLP in Newport Beach, Calif. McCarthy has spoken to operators about labor issues at Greater California Livery Association (GCLA) meetings. She can be reached at (949) 608-6920 or [email protected]
Colleen McCarthy is a Partner in the Employment Law Practice Group Of Ferruzzo & Ferruzzo, LLP in Newport Beach, Calif. McCarthy has spoken to operators about labor issues at Greater California Livery Association (GCLA) meetings. She can be reached at (949) 608-6920 or cmccarthy@ferruzzo.com.

By Colleen McCarthy

Uber is appealing the California Labor Commissioner’s decision that former Uber driver, Barbara Berwick, was an employee rather than an independent contractor.  In her decision, Labor Commissioner Hearing Officer Stephanie Barrett awarded just over $4,000 in expenses and interest to Berwick.  The award became public after Uber appealed the decision in the San Francisco County Superior Court on June 16.

Background article here: Labor Ruling Highlights Legal Troubles For TNCs

Berwick filed her claim on Sept. 16, 2014, seeking unpaid wages for just over eight weeks of work, reimbursement of mileage and toll charges, liquidated damages, and waiting time penalties.  She was not represented by an attorney.

The Labor Commissioner cited several ways in which it found that Uber acted more like an employer than an app connecting driver with customer. The Hearing Officer relied on the rule in California that there is a presumption of an employment relationship. She determined that by obtaining clients in need of services and providing workers to conduct those services, Uber retained all necessary control over the operation as a whole. The Labor Commissioner also stated that the driver’s work was integral to Uber’s business and that without drivers, Uber’s business would not exist.  

The Labor Commissioner did not buy Uber’s argument that it is a neutral technological platform designed to enable drivers and passengers to transact the business of transportation. Rather, the Labor Commissioner found that Uber is involved in every aspect – from vetting the drivers through background and DMV checks, to insisting that the drivers’ cars be registered with the DMV and can be no more than 10 years old.  The Labor Commissioner further relied on the fact that Uber sets the price for the trips, provides drivers with an iPhone app, and discourages drivers from accepting tips.

Because the Labor Commissioner found that sufficient documentation of Berwick’s hours and payments had not been provided, Berwick had not met her burden and Uber would not be penalized.  Thus, her claim for wages, liquidated damages, and penalties was dismissed.

Uber is appealing the decision, which adds to the barrage of litigation against the company.  Although Uber has prevailed in other states on the issue, they have not yet succeeded in California.  The Labor Commissioner’s decision applies to Berwick alone and does not have widespread applicability, but it reveals how the Labor Commissioner might weigh in on similar cases.

What is the effect on limousine, charter and tour companies? It solidifies the advice they have been receiving for years that with only very limited exception, chauffeurs must be classified as employees rather than independent contractors. The law may soon be catching up with Uber and other companies like Lyft to help level the playing field enjoyed by limousine, charter and tour companies alike.

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