Sledgehammer

By Carolyn Said
Wednesday, June 17, 2015 – Updated 9:26 pm

An Uber driver is an employee, not an independent contractor, the California Labor Commission ruled this month, in a decision that foreshadows a big challenge to Uber’s business model and potential seismic changes to the nation’s classifications of workers.

The case involves a San Francisco driver who was awarded a $4,152.20 reimbursement for expenses — chump change for Uber, which has an immense war chest and a valuation of $50 billion.

But observers seized on the ruling as a possible game-changer for Uber, Lyft and other on-demand companies like Postmates and Handy, which all rely on vast workforces of independent contractors. If those workers were reclassified as employees, the companies would be on the hook for pricey benefits such as workers’ compensation, insurance, and expenses like gasoline.

“This ruling will have a chilling effect on the entire sharing economy,” said Berin Szoka, president of TechFreedom, a think tank, using the term for companies that harness underutilized assets.

Legal experts cautioned that labor commission rulings don’t set precedents, a point that Uber also made.