Will Uber Become An Issue In The Presidential Race?

According to a story on Business Insider, Hillary Clinton commented that she would “crack down on employers who misclassify employees as independent contractors.” Currently, Uber is fighting a federal class action lawsuit facing allegations that Uber drivers should be classified as employees versus independent contractors due to the amount of control they exert over driver actions and behaviors. This happens all on the heels of a ruling by the California Labor Commission that an Uber driver was an employee versus an independent contractor. The California ruling only pertained to the single Uber driver but many believe that it is precedent setting – at least in the state of California – as there were no exceptional circumstances that didn’t also exist with every other Uber driver.

Uber’s entire business model hinges on the fact that it’s drivers are independent contractors versus employees. This classification allows it to have a much larger workforce, be more easily accessible and in more locations for consumers since it doesn’t have to worry about employee benefits, social security or other employment concerns. This may be why Uber’s CEO, Travis Kalanick, wants to purchase 500,000 autonomous vehicles from Tesla by 2020 as we reported last week.

With a current fleet of 160,000 drivers and major expansion efforts on the part of Uber, both OEMs and dealers have been creating partnerships in order to capitalize on sales to aspiring Uber drivers who must operate vehicles that fit into specific requirements in order for the consumer to drive on behalf of Uber. Should these drivers win in their class-action suit or future President’s pursue this, it could very easily derail any efforts by dealers or manufacturers. Uber would be forced to change its business model by either increasing fares, reducing payments to drivers or both. This could cause a mass exodus of Uber drivers and stall future expansion into non-Uber areas which is exactly why political hopefuls or incumbents may want to embrace this issue, especially in states which are experiencing pushback from taxi companies and unions.