A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.

The ruling, filed on Tuesday in state court in San Francisco, was the latest in a host of legal and regulatory challenges facing Uber and other highly valued start-ups in the United States and other countries.

The commission said Uber is “involved in every aspect of the operation.”

Classifying Uber drivers as employees opens the company up to considerably higher costs, including Social Security, workers’ compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services.

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Source:Skift