Uber Just Lost a Major Lawsuit in California That Could Cost the $50 Billion Company a Lot of Money

Employees are expensive, and they come with a host of needs, wants and rights that stand between many companies and outrageous profits.

Uber, a $50 billion entity, has long forgone the costly nature of employed human beings by giving their drivers independent contractor status.

As of today, that will no longer be the case.

The California labor commission has just ruled that Uber drivers are in fact employees on account of being “involved in every aspect of the [driver’s] operation.”

The ruling means Uber will now be liable to pay Social Security, workers’ compensation and unemployment insurance for its California fleet of drivers. It could also force the company to pay for expenses like gas, car maintenance and insurance, which drivers have had to take on themselves until now.

It’s a major blow to the 1099 economy business model, largely supported by contracted work with no strings attached, and will significantly depreciate Uber’s valuation if it sticks.

While the ruling is only applicable in California, the governments of the 58 countries in which Uber operates just gained a major point of leverage.

Uber, of course, will appeal the ruling, which will put the company in the same legal limbo it finds itself in the rest of the world.

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