Uber’s value will not take hit from CLC ruling: investors

Ride-sharing firm could benefit from full-time employees, say stakeholders

Tags: USAUber (www.uber.com/)
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Uber’s value will not take hit from CLC ruling: investors (Getty Images)
By  Stephen McBride Published  June 22, 2015

Uber investors have downplayed the knock-on effects to the market value of the company and other ride-sharing businesses, following the California Labor Commission's decision to classify a San Francisco driver as a de facto employee rather than an independent contractor, Reuters reported.

The Uber investors said that start-ups need more flexibility in their workforce and favour the use of contractors, but as companies grow, they can benefit from fixed hours for their employees.

"If they had to change [to] that, it would be just fine," Reuters quoted an unnamed investor as saying.

That investor added that the paying of benefits, and other overheads associated with employing worker on a full-time basis, would be offset by the lower wages normally associated with permanent employment and so was unlikely to damage the market value of the business, which now stands at more than $40bn.

However, the Commission's decision could be more far-reaching than investors anticipate. Uber is appealing the ruling, which for now applies to just one driver out of 22,000 in San Francisco. That driver drove for Uber for two months and was awarded $4,000 in expenses. If the ruling is upheld and further cases broaden applicability to other drivers, Uber could face millions of dollars in retroactive claims.

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