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California Labor Commission Smacks Uber Right On Its Fountainhead

For the "1099 economy," people remain the unsolvable element.

Remember how Uber and its fellow "1099 economy" tech bros wanted to create a "third class of worker" that would better fit their needs as mobile service applications that flout existing employment regulations?

Well, they better hustle up on that.

A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.
The ruling, filed on Tuesday in state court in San Francisco, was the latest in a host of legal and regulatory challenges facing Uber and other highly valued start-ups in the United States and other countries.

The ruling itself awards about $4,000 to a single Uber driver who sued the company for unpaid expenses and damages, but the language of the ruling is a blaring indictment of the way Uber and other "Uber Economy" startups are behaving with regards to California's labor laws.

Here's one particularly damning snippet:

Defendants hold themselves out as nothing more than a neutral technology platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that Defendants are involved in every aspect of the operation.

That's what the suits call "establishing some motherf*cking precedent" and it could force an entire niche industry to rethink everything.

For instance, if Uber loses its appeal, it could be compelled to pay drivers salaries, health care and even pay into unemployment insurance. In the case of Uber - with its $6 billion in funding, strong revenue model and $40 billion valuation - the ruling would be just a pain in their very wealthy ass. They can afford some rethinking and might come out the other side valued at only, like, $15 billion.

Let's be honest, Uber is a killer data company and is already kidnapping hiring scientists to build driverless cars.

But let's talk about who really gets f*cked if this precedent stays on the books in Cali; Everyone else.

A perfect example is Uber for home services, Handy. The New York-based startup is already dealing with lawsuits like the one that just bit Uber, and it's nowhere near as deeply funded as everyone's favorite Ayn Rand-themed car service.

For companies like that, who rely on the vague space between a W2 and a 1099, the idea of paying everyone like a full-timer is essentially a terminal diagnosis.

So...happy humpday?!

Uber driver is employee, not contractor: California Labor Commission [Reuters]


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