In 2013, California became the first state to issue regulations normalizing the legal status of ride-booking smartphone apps. Now it's vying on a couple of fronts to crush Uber, the biggest company providing that service.
Two ongoing legal matters are creating a pincer, one through fines and the other by making the business model far more expensive. In July, an administrative judge with California's Public Utility Commission ruled that Uber had failed to pass on legally required accident records and information regarding disabled use of and access to the service. The judge wants to hit Uber with a $7.3 million fine and pull its license to operate in the state until she's satisfied with the company's data reporting. As of press time, Uber says it will appeal the decision.
Simultaneously, a lawsuit in the state is claiming that Uber illegally classifies its drivers, who use the app to connect with customers, as contractors, not employees. Uber neither provides equipment nor dictates hours worked nor supervises the manner in which the work is done, unlike traditional employers.
The tech website Re/code calculated that treating California Uber drivers as employees would cost the company an additional $209 million per year at current driver levels.