by Andrew Dunn, Eric Newcomer & James Nash:

California’s labor commissioner said a driver who connects with customers through the Uber Technologies Inc. app must be considered an employee, a decision that strikes at the heart of its business model.

San Francisco-based Uber, like other “sharing economy” startups, has built a business around a flexible car fleet piloted by people it contends are independent contractors. If upheld, the decision might require the company to provide health insurance and guarantee a minimum wage — neither of which is required for contractors.

“We see this as a problem that’s growing larger with each year, with employees lacking security and even basic rights when they are treated as independent contractors,” said Steve Smith, spokesman for the California Labor Federation, which has backed tougher regulations on ridesharing companies.