A California labor board has ruled that drivers for the ride-sharing service Uber are employees, not independent contractors -- a decision that could have major implications for the global startup.
In the ruling earlier this month by the state's labor commission, Uber was ordered to reimburse one of its drivers, Barbara Ann Berwick, more than $4,000 for employee expenses.
The ruling has been appealed in court and would only impact Uber drivers in California.
But if the case ends up applying to Uber's global operations, it could potentially take away one of the underpinnings of its business model, which considers drivers independent contractors.
The commission's order was included in the appeal filed by Uber in California Superior Court in San Francisco.
State hearing officer Stephanie Barrett wrote that while Uber claims to be a "neutral technological platform" for independent drivers, it sets most of the terms of employment.
Uber and its management team "are involved in every aspect of the operation" including vetting prospective drivers and terminating them if their rating levels are low, the hearing officer wrote.
Because of this, Barrett wrote, Uber must "indemnify an employee for all that the employee necessarily expends in the discharge of the employee's duties."
Berwick had requested the reimbursement of tolls and others expenses incurred while driving.
But if all drivers are classified as employees, it could require Uber to pay hefty amounts for social security, workers' compensation and other charges.
Uber has become one of the world's most valuable startups, worth an estimated $50 billion, as it has expanded to more than 50 countries.
But it has faced regulatory hurdles and protests from established taxi operators in most locations where it has launched.
The company did not immediately respond to an AFP request for comment.