The debate over whether Uber drivers should be classified as employees or independent contractors is ongoing, with multiple court cases vying to determine how the classification works going forward. Yet, the California Labor Commission has weighed in first, ruling that a driver for Uber should be classified as an employee, not an independent contractor. The ruling is limited to a single Uber driver, and could be altered through the appellate process. But the ruling lays out enough rationale that it may be persuasive in similar fights nationwide.

Employees are covered by labor laws, such as minimum-wage and antidiscrimination statutes, while independent contractors are entitled to flexibility — but few legal protections of their position. The test for determining whether an individual is an employee or an independent contractor is a complex one, with an 11-point test laid out by the California Supreme Court. Among the factors that weigh in favor of Uber drivers as employees is the fact that Uber drivers are not engaged in an occupation distinct from that of Uber, because the drivers are in fact the basis of Uber’s business. By obtaining the users of the app and providing the drivers to conduct the service, Uber retained all necessary control over the operation as a whole, the Commission determined. Because the work of the Uber drivers is an integral part of Uber’s business, the Commission ruled that the Uber driver in question was an employee.

In contrast, Uber contends that drivers can set their own hours, choose when and whether to work, and own the vehicles used to perform the work. Further, Uber denies that it is a transportation company at all, instead arguing it is just a technology company that facilitates transportation transactions. However, the Commission pointed out that, if drivers do not work for 180 days, they are terminated, and that Uber vets prospective drivers, controls the type of car they can use, and closely monitors approval ratings — terminating drivers whose overall rating dips below 4.6 out of 5 stars. Beyond that, Uber sets the prices its drivers may charge, the service fee the drivers are paid as a percentage of that price, and determines when the driver is entitled to a cancellation fee. Uber drivers are also discouraged from accepting tips due to Uber’s marketing strategy.

The binary determination of individuals as either employees or independent contractors can be difficult to assess, and may not be a perfect fit with the way employment is evolving in the growing sharing economy. In the last several months, it has been argued that a third category, perhaps called “dependent contractor,” might better encapsulate the complexities of people, like Uber drivers, who experience more flexibility in their workdays than traditional employees, but who are also more closely tied to a company or an employer than a true independent contractor. What protections “dependent contractors” might be entitled to, and what freedoms they might lose with the classification, would need to be worked out. But creation of the new category is one potential solution to the ongoing debate about how to treat Uber drivers and other workers in the sharing economy.

The fight is far from over, with two federal class action cases, one by Uber drivers and one by Lyft drivers, currently heading to jury trial to determine whether drivers are being misclassified as independent contractors. The Labor Commission’s decision is also open to appeal, and with similar issues arising nationwide, it is very likely this question is not resolved. Yet, the ruling may provide some guidance to the various stakeholders in this debate, and to the judges who may ultimately determine the answer.