An employment court in London has ruled that Uber must treat its drives in the United Kingdom as employees, not contractors.

Uber has been fighting legal battles in several geographic locations over its business model that treats drivers as independent contractors who are, at least theoretically, using Uber's platform to conduct business with riders rather than working for Uber. Back in April, Uber settled class-action lawsuits with drivers in Massachusetts and California in an agreement that has Uber paying drivers up to $100 million but preserving the right to treat them as independent contractors. Although both parties agreed to the settlement, it has not yet won approval from the court.

Under this ruling, however, Uber must treat its drivers in the U.K. as employees. It's a blow to the gig economy concept in that country, and a bigger blow to Uber which, under British law, will now have to give its 40,000 British drivers paid time off and pensions, among other benefits. It will also have to pay them the "national living wage," the court ruled.

The decision could conceivably lead to employee status for more than 400,000 workers currently defined as contractors in the U.K.. It may set a precedent in other British lawsuits as well--for example four messenger companies are currently being sued by bicycle messengers who claim they should have employee status.

Rulings outside the United States aren't generally used as precedent for U.S. court cases, so the decision shouldn't have a direct effect on Uber's never-ending legal battles here at home. (It's facing class action and individual lawsuits over the employee/contractor question in at least eight states.) But the U.K. decision could have a psychological effect because the British court's ruling lays bare the torturously twisted logic the company uses to justify its gig-based businesss model.

It's not a pretty picture. Court decisions aren't usually good for comic relief, but this decision is a noteworthy exception. It is "essential" for Uber's argument that drivers aren't employees that the contract for their services exists between the driver and the passenger--not the driver and Uber, the court notes. But then the court delves into exactly what that means:

Uber's case is that the driver enters into a binding agreement with a person whose identity he does not know (and will never know) and who does not know and will never know his identity, to undertake a journey to a destination not told to him until the journey begins, by a route prescribed by a stranger to the contract [Uber] from which he is not free to depart (at least not without risk), for a fee which (a) is set by the stranger, and (b) is not known by the passenger (who only is told the total to be paid) , (c) is calculated by the stranger (as a percentage of the total sum) and (d) is paid to the stranger. Uber's case has to be that if the organisation became insolvent, the drivers would have enforceable rights directly against the passengers.

When you put it like that, Uber's position that it is merely a "platform" that drivers and passengers use to transact business together looks pretty silly. Nevertheless, the company says it will appeal. Meantime, will American judges look at the British decision and apply that same logic here--where there are close to half a million Uber drivers?

You never know.

Published on: Oct 29, 2016
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