Florida has decided that Uber drivers are not freelance contractors, as Uber has long claimed them to be, but are, in fact, employees of the company.
The decision, brought by the Florida Department of Economic Opportunity, upends the very business model that has propelled Uber to a $41 billion startup that has steamrolled across markets from Beirut to Boise, and is bound to be vigorously protested by the company. By designating drivers as contractors — Uber even goes so far as to refer to drivers as customers, saying that drivers license the app from Uber like any technology consumer — Uber doesn t have to pay for health care, disability, overtime, sick days, maternity leave or vacation, as most employers must. That keeps their profit margins up and enables the company to grow at breakneck speed. No cumbersome employee interviews to conduct.
Florida s decision effects for the time being one man, but will likely have ripple effects across Uber s Florida operations and perhaps beyond. State authorities this week notified Darrin McGillis, 46, a former Uber driver who was fired earlier this spring. He filed for unemployment benefits, and after an investigation, the state determined you are an employee of that company and McGillis is entitled to receive benefits backdating to March 29.
McGillis shared the documents, letters written by the Department of Economic Opportunity s Reemployment Assistance Program, with the Mercury News. The decision came the same day a group from Stanford University released a survey showing that contract workers for on-demand companies such as Uber struggle with financial uncertainty and lack the critical safety net of health care and other benefits.
Uber did not immediately respond to a request for comment late Thursday.
The Miami Herald on Thursday published a story about the state s decision and McGillis story. According to the report, Uber deactivated McGillis account after the driver had demanded the contact information of a passenger who had damaged his car. Uber refused, citing privacy concerns, and told McGillis to file a claim. McGillis had borrowed $30,000 to buy the car so he could drive for Uber and now says he can t afford the $600 monthly payments.
Florida determined that there was no evidence that McGillis committed any misconduct at work, and as he was fired without justification, he can collect benefits.
Uber has until June 3 to appeal the state s decision to classify McGillis as an employee, and until June 9 to appeal the decision that he has a right to unemployment benefits. The company is fighting a similar battle in California, where former drivers sued Uber for misclassifying them as contractors.
Photo taken on April 24, 2014, shows an image of the Uber smartphone application. By BRITTA PEDERSEN/AFP/Getty Images.
