17th June, 2015: A California Labor Commission ruled that an Uber driver should be classified as an "employee" and not an "independent contractor". This ruling will most certainly have serious implications for Uber and the on-demand economy. Uber which has always claimed to be a “logistics company,” where it "facilitates a transaction" and does not actually "transport" passengers. This is done by the driver.
The ruling ordered Uber to reimburse its former driver, Ms Barbara Ann Berwick, $4,152.20 in expenses and other costs for the period when when she worked as a driver.
Uber inter alia argued that it did not control the working hours of the drivers not require drivers to complete any specific number of trips. The Labor Commission cited instances where Uber acted like an employer. The ruling noted Uber which provided drivers with phones deactivated the app if drivers were inactive for 180 days.
The Commission ruled ”Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” the ruling states. “The reality, however, is that defendants are involved in every aspect of the operation.”
Uber in India too seemed to have taken a similar position vis-a-vis the service tax authorities initially saying they were merely a technology platform to enable the transaction and were not really providing transportation. The service tax liability would be with the driver. However this didn't go down well with the tax authorities in India. Subsequently effective from April 21st, all web based cab aggregators (as they are called in India) have begun to pay service tax after donning the role of "service provider". The drivers don't pay any service tax.