California labor commission rules Uber drivers are employees

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early uber driver Sofiane

Momentum Magazine/Uber

Sofiane was one of Uber's first drivers, and he's done more than 20,000 trips.

The California labor commission has ruled Uber drivers are employees, Reuters reports. It's potentially a huge blow to Uber's business model.

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Uber has more than 1 million drivers world wide.

Right now, Uber has hardly any costs other than its 1,000+ employees in its San Francisco headquarters. Uber takes a percentage of every ride. It doesn't employ drivers, it merely connects supply (user requests on its app) with demand (drivers who are roaming around the area and have agreed to partner with Uber).

If this sticks, Uber won't just be a money-making software/logistics company anymore. The cost to run the business would skyrocket. Uber would have to seriously downsize the number of drivers it has as partners and provide benefits for them all.

Both Uber and Lyft have been hit with lawsuits from drivers asking to be made official Uber employees. The companies insist their drivers should be independent contractors.

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Breaking, more to come.

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