Just as Erie acclimates to Uber – the app based ride sharing service – there may be changes on the horizon. This comes after the California Labor Commission declares Uber drivers employees of the company, rather than freelance drivers.
Currently, Uber drivers enroll to participate as a contracted driver for Uber. Uber collects 20 percent on each fare drivers net the remainder. Uber is not responsible for paying taxes on a driver’s revenues, nor is it responsible for the driver’s insurance or vehicle maintenance.
In theory, it provides a modicum of independence for both Uber and its drivers, allowing drivers to write off operating and maintenance costs the way any freelance or self-employed person might do. In the age of digital entrepreneurship, this has become known as the 1099 economy. Effectively, technology makes it possible for nearly anyone to freelance in nearly any industry, and as a result corporations are taking to the opportunity to reduce overhead and increase profit margins. But for some Uber drivers, the promise of Uber independence didn’t add up.
“Uber makes billions on the backs of drivers. We own the cars, we pay for gas, we pay for maintenance, we suffer the depreciation, and we take all of the risks,” one driver told the New York Post during a protest in September 2014 after Uber reduced fares in Manhattan to compete with Yellow Cab and other car services.
After tolls, gas and maintenance, some Uber drivers in major metropolitan markets report making less than minimum wage.
This was at the heart of the complaint in which California Uber driver Barbara Berwick, who sought reimbursement of fees associated with being an Uber operator.
Uber maintains that it is a neutral application which simply connects drivers and riders. However, the California Labor Commission concluded that “the reality... is that defendants are involved in every aspect of the operation.”
The California Labor Commission awarded Berwick $4,152.20 in expenses associated with her time as an Uber driver and it declared her an Uber employee. Uber has countered that the ruling applies only to Berwick and not to its more than 1 million contracted drivers worldwide.
What remains to be seen is if Uber’s current valuation of more than $40 Billion will be affected by the prospect of additional challenges from its contractors. Uber has appealed the decision of the California Labor Commission.
Jim Wertz can be reached at jWertz@ErieReader.com, and you can follow him on Twitter @jim_wertz.