Date
22 July 2017
Uber driver Barbara Ann Berwick is shown in her home in San Francisco. California has ruled that an Uber driver is an employee, not a contractor, potentially raising costs for the company. Photo: Reuters
Uber driver Barbara Ann Berwick is shown in her home in San Francisco. California has ruled that an Uber driver is an employee, not a contractor, potentially raising costs for the company. Photo: Reuters

California ruling on taxi drivers hits Uber in the pocket

Taxi-hailing service Uber faces increased costs after California ruled that its drivers are employees, not contractors.

The decision by the California Labor Commission could ripple across a vast sector of smartphone-based services, hitting companies such as Uber rival Lyft, house chore service TaskRabbit and cleaning company Homejoy.

The ruling was the latest in a series of legal and regulatory challenges for the company and other start-ups in the US and other countries, although Uber says it applies to only one driver.

On Wednesday, an Indian court left a ban on Uber in place in Delhi after the company challenged it.

The action followed last week’s lifting of a ban on Uber rival TaxiForSure owned by ANI Technologies Pvt. Ltd.

The Californa decision means considerably higher costs for Uber including Social Security, workers’ compensation and unemployment insurance, according to Reuters.

That in turn could affect its valuation, currently above US$40 billion, and those of other companies that rely on large networks of individuals to provide service.

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CG/RA

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