A significant event has occurred out in California regarding Uber. The California Labor Commission came down with a ruling in which an Uber driver was considered an employee, not an independent contractor, of Uber. The decision only applies to the one driver who had filed the complaint, and Uber has to pay her back for about five thousand bucks in expenses that she incurred.
Über will appeal the ruling, but it does not bode well for the company going forward. A California judge already sent a class-action lawsuit regarding the same issue to a jury trial. If that falls against Uber, the company is going to be paying out a lot of money to both employees, and to the federal and state taxing authorities for payroll taxes, unemployment insurance, workman’s comp, and so on.
We can expect to see this same thing happen in every state. Somebody will file a regulatory complaint and a class-action lawsuit. Ultimately, it may or may not change whether Uber operates in each state where it loses. It just depends whether it remains profitable to do so.
In NYC, we can expect the same fight at some point. As it is, Uber is struggling. Yes, it appears to have caught a good deal of market share in the black-car arena, but it has barely impacted the taxi medallion financial industry. A recent TLC data dump revealed only a 4% YOY revenue decline for taxis, and that is not going to effect any driver’s loan payments to taxi medallion financial lenders. There are still no loan losses at any medallion financial lender that I am aware of, although short-sellers keep pressing their desperate case that “it will happen one day! Just you watch!”
Meanwhile, a white paper just came out that showed UberX drivers in NYC lose 68% of their revenue to operating costs, commissions, taxes, and fees. UberX is not competing in NYC. It is losing.