The California Labor Commission has ruled Uber drivers are employees and not independent contractors, Reuters reports.
The ruling has serious implications for Uber’s business model, since the company will now be required to offer its drivers benefits that meet the requirements of the Californian labor laws.
Based in San Francisco, Uber’s headquarters employs approximately 1,000+ people. Its product acts as a logistics software that connects drivers to riders, offers turn-by-turn directions and simplifies the transaction.
Although Uber does not hand-select its fleet of drivers, it promotes an open invitation to anyone aged 21 or older with a commercial driver’s license, a car (models 2000 or 2005 later, depending on the city) and presumably a clean driving record.
Counting drivers as employees would mean Uber has to seriously scale down its number of drivers if it is to provide health benefits and pay social security and medicare taxes. Uber would have to cover other work-related expenses, such as gas, car insurance and repairs.
Naturally, Uber will appeal the commissioner’s award of about $4,000 in expenses to its drivers.
➤ Reuters
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