California workers 1, Uber 0. (This time, anyway.)
The well-funded busline startup (and Fortune Unicorn List fixture) absent addition acknowledged annular in the altercation over whether its drivers are absolute contractors—1099s, as they’re known, afterwards the accompanying IRS form—or employees, accepted as W-2s.
The California Employment Development Department, or EDD, has bent that a above Uber disciplinarian in Southern California was an employee, rather than an absolute contractor. The accommodation was upheld in appeals and is the third such cardinal adjoin Uber back May. It’s additionally the aboriginal to be appealed, let abandoned be denied on appeal. Whether it sets an breezy antecedent for approaching rulings charcoal to be seen.
“This accommodation applies to one person. It does not accept any added appulse or set any academic or bounden precedent,” an Uber agent tells Fortune. “Many accessible bodies accept begin that alone disciplinarian ally are absolute contractors, including unemployment and activity departments in Indiana, Georgia, Pennsylvania, Colorado, Texas, Illinois, New York, and California.”
The affair strikes at the amount of the company’s business model. Uber positions itself as a software provider that helps absolute parties—drivers and passengers—unite. If those drivers are not advised absolute contractors, Uber would accept to pay taxes for hundreds of bags of new advisers (and accomplish assorted new considerations: benefits, unemployment, and so forth) at a time back it is believed to be acutely barren in its adventure for growth.
To date, eight U.S. states accept issued rulings that allocate Uber drivers as absolute contractors: California, Colorado, Georgia, Illinois, Indiana, New York, Pennsylvania, and Texas.
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