California Labor Commission Rules Uber Driver Is Employee, Not Contractor; NSW Opposition Leader Flags Pro-Uber Bill
Thursday 25 June 2015 @ 11.47 a.m. | Industrial Law | Trade & Commerce
A California Labor Commissioner’s decision to consider a driver for Uber an employee, rather than an independent contractor, has attracted international media attention for the implications it may have for “sharing economy” related services. Uber insist that the ruling applies only to the driver involved in the case, Ms Barbara Berwick, and are planning to appeal the decision.
The decision comes as NSW Opposition Leader Luke Foley told ABC News he planned to use his budget reply speech to flag a private member’s bill he aims to introduce later in the year that would “seek to legalise and regulate businesses like the ride-sharing service Uber by introducing checks on drivers to ensure they have no criminal record and are properly insured.” He told ABC News:
“The Government's defying reality by pretending that the emerging ride-sharing industry is illegal or could be fined out of existence… It won't be, it can't be. It's here to stay, let's regulate it in the public interest. The people have voted with their feet: a million ride sharing trips in Sydney last year. That number will only grow."
California Case
The Californian decision came to light when Uber appealed in a filing in a San Francisco court. According to Reuters, “[c]lassifying Uber drivers as employees could mean considerably higher costs for the company, including Social Security, workers’ compensation and unemployment insurance.” Uber will not have to make any immediate changes, as it is appealing the decision, which would only apply in California in any case. Uber told Reuters in a statement that “officials in five other states have found that its drivers are independent contractors” and that the same official who made the most recent decision had in 2012 decided a different Uber driver was an independent contractor.
Employees v Independent Contractors
Uber are far from the only company to come up against the problem of classification. In an article written for The Conversation, Associate Professor Sarah Kaine wrote that:
“Classification as “independent contractor” or employee is a vexed issue even in the old economy. The use of “independent contractors” is not new. In Australia, for example, owner-drivers have long been the mainstay of the road transport sector.”
She pointed to last year’s dispute between the Fair Work Ombudsman and Coles regarding its liabilities towards contracted trolley collectors as an example of another company that faced legal action over classification. Coles reached an out-of-court settlement with the Ombudsman, that committed to bringing trolley collection services back in-house. She said:
“While on the one hand this could be viewed as Coles taking moral responsibility, it did keep the issue out of the courts, where any formal decision could have set a precedent for the many hundreds of independent owner-drivers engaged by Coles.”
Australian law explicitly recognises that the classification can be subject to misuse to avoid paying employee entitlements. Under Chapter 3, Division 6 of the Fair Work Act 2009 (Cth), employers can be subject to serious penalties if they are found to have entered into “sham contracting arrangements”, where an employer attempts to disguise employment relationships as independent contracting arrangements.
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