This decision could erode the business model of UBER: A driver can be seen as employee and not as self employed driver, said the working committee from California.
A decision of the Californian authorities decided drivers for UBER can be seen as employees and not as self employed drivers. UBER will appeal this decision. The decision got triggered by a fight between UBER and on of the drivers, who demanded money. The company did not see itself to be forced to pay a salary since the driver is an independent service provider and the UBER platform is just the agency for the services. The authorities contested that UBER is dictating important framework, e.g. the age of the car, or whom is allowed to be the driver. The company has to pay more than 4000 Dollar to the woman.
With the classification as employees, drivers can claim way more rights like social security and unemployment insurance. This would increase the costs for UBER and impact the evaluation of the company, which is at around 40 billion USD at the moment.
Uber defines itself as a service agency
Uber explained in it’s reaction, the decision of the commission is not binding, applies only to this specific case and contradicts an earlier decision. Five other American states decided Uber drivers are independant contractors. The role as a service agency is a key element of it’s business model, also to go around strict regulating guidelines for the classic taxi businesses.
Several other companies got inspired by the UBER business model: Wahio is offering services to do laundry, Helpling sends cleaning staff and Task Rabbit finds somebody to paint your apartment, takes out your dog or stands in line to buy your concert ticket. The service providers define themselfes as agents for services and do not employ the work force. Since the number of businesses and there impact is increasing, the discussions about these practices are as well.