The Supreme Court of the United Kingdom has ruled that Uber (NYSE: UBER) drivers are legal employees, not independent contractors. The ruling is the latest in an international trend of court decisions rebuking Uber's business practices.
Uber's general argument for classifying its workers as contractors instead of employees is that it acts as a middleman for independent drivers and clients, akin to Airbnb (NASDAQ: ABNB). However, courts and legislators worldwide don't seem to agree with this argument, with many asserting that Uber exerts far more control over its drivers than should be expected for independent contractors.
"Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill," said Supreme Court Justice Lord George Leggatt.
The ruling would require Uber to pay drivers for their time, not just their fares, by paying drivers from the second they log in to the Uber app to the time they log out for the day. Uber drivers would also be eligible to receive the U.K.'s £8.72 minimum wage ($12.22).
The United Kingdom's decision is the latest legal loss for Uber and only the latest of its ongoing legal battles to wrap up. California helped set a precedent in 2019 with the passage of legislation that, if enacted, would have reclassified gig drivers as employees. The legislation was tied up in courts until being overturned by California voters in 2020.
Despite the legislation being shot down in California, France's Court of Cassation would rule last year that Uber drivers must be reclassified as employees, being joined by Spain shortly after. Currently, Uber is facing litigation in Massachusetts and Canada over its classification of workers.
The court decision didn't leave a good impression on investors, driving Uber's share price down during Friday trading. Uber started the day relatively strong, jumping 2.15% to $60.27 from the previous closing price of $59. During the latter half of the day, Uber slid 3% to end the day at 58.42.