Uber's Business May Be Upended Despite Limitations of California Labor Decision

NEW YORK (TheStreet) -- A ruling by the California Labor Commission that declared an Uber driver to be an employee of the ride-sharing company may not initially affect all Uber drivers, but potentially lays the groundwork for a serious disruption in Uber's business model.

That was the general consensus Wednesday after the Labor Commission awarded former Uber driver Barbara Ann Berwick $4,152.20 in expenses she had sought for the period in 2014 during which she drove for Uber. Uber views its drivers not as company employees in the traditional sense, but as independent contractors who drive for Uber whenever they want.

Initial reaction to the ruling was such that all Uber drivers in California would now be considered Uber employees. However, an Uber spokeswoman said in a statement that the Labor Commission's decision was an isolated case only affecting the single plaintiff, and that the ruling was also non-binding.

"Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver 'performed services as an independent contractor, and not as a bona fide employee," said the statement posted in Uber's online newsroom. "Five other states have also come to the same conclusion." Uber said it has already filed an appeal of the Berwick ruling.

However, industry analysts said the decision highlights many of the labor issues involving the growing ride-sharing business, and brings up the possibility that Uber's business model may be overturned at a time when the company is facing criticism about its operations and may be exploring going public in the near future.

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