Court Ruling on Contractors a Red Flag for On-Demand Services

A three-judge panel of the U.S. 9th Circuit Court of Appeals last week called a spade a spade: If you’re driving a FedEx-branded truck, wearing a FedEx uniform, and doing what FedEx tells you to do, then you’re a Fedex employee, not an independent contractor.

The implications of the ruling for companies such as Uber, Lyft, Google, Amazon, Instacart and others could be dramatic.

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Last week’s ruling aside, the legal battle over contractors is unlikely to go away anytime soon. Indeed, many labor unions around the world view Uber and its ilk as a mortal threat—one of the reasons that Uber has run into stiff resistance in labor-friendly European countries such as France and Germany. The company last month hired David Plouffe, a former adviser to President Barack Obama, as its lead public policy executive to deal with the many novel legal, political and regulatory issues that the company faces.

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“This is a touchy subject and delicate for us and others in the space,” said the founder of one “sharing economy” startup. “If we had to move our drivers into an employee-type model it would be unfeasible.”