Ride service Uber had a setback last month when the California Labor Commission ordered the company pay one of its drivers, Barbara Ann Berwick, over four thousand dollars for expenses.
For sharing economy services like Uber this is a problem as their business model depends upon shifting all the costs and as much of the risks as possible onto contractors.
Should the ruling set a precedent the economics of these services start to look shaky and could even challenge the shifting of risks to users and contractors.
Take away the new age romanticism spouted by some over services like Uber, Freelancer and 99 Designs and there’s a ruthless business model that minimises costs and risks, that low level of overheads is why these companies have been so successful in attracting investors.
For the workers, carrying the costs and the risks isn’t such a good deal. “If you work it out,”Barbara Berwick said, “if I didn’t get compensated for expenses, I’d be working for less than minimum wage.”
While the ruling makes life less precarious for drivers like Berwick, it may curb the enthusiasm of the investor community for the sharing economy.
