The gig economy in the U.K. was upended on Friday after a group of former drivers for Uber Technologies (NYSE:UBER) were deemed workers, not independent contractors, by the British Supreme Court. 

While Uber says the ruling applies only to the drivers who sued the company, not its other drivers, and also does not apply to those driving for Uber Eats, labor activists see the decision as a precedent to apply to other gig economy companies.

The case now returns to the U.K.'s Employment Tribunal to determine how much compensation the plaintiffs are entitled to receive.

Smiling Uber driver with passengers

Image source: Uber Technologies.

The case is similar to the recent effort in California to classify Uber drivers as employees, though Uber got the state law overturned by passage of the Proposition 22 ballot initiative.

Just as in the California case, Uber argued it was simply a technology company, but the U.K. courts did not agree that this transformed Uber's relationship with its drivers. In upholding a lower court decision, the Supreme Court agreed with the argument that "Uber is no more a 'technology company' than Yellow Cab is a 'technology company' because it uses CB radios to dispatch taxi cabs."

The U.K. is a significant market for Uber. It noted that in 2019, London was among five cities that represented 23% of its total revenue.

Still, Uber says the ruling will not substantially alter its operations because, since the suit was first brought in 2016, it has made significant changes to its business such as up-front pricing, no penalties for rejecting multiple fares, and offering insurance benefits.

The Supreme Court also held that drivers become workers as soon as they connect with the Uber app, not only when they have fares. It also means drivers are entitled to receive the minimum wage and worker benefits.

Uber says it intends to consult with its drivers to see what other demands they have.

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