<i>&gt;It&#x27;s a murky area. </i><p>Like you said, it&#x27;s a gray area and applying the IRS 20 Questions does not yield an exact black &amp; white determination of contractor vs employee.  The drivers have hybrid attributes of <i>both</i> contractors <i>and</i> employees.  In some ways, the Uber drivers are like &quot;contractors&quot; such as hair salon stylists, Hollywood stuntmen, fashion models, magazine photographers, etc.  On the other hand, they are like &quot;employees&quot; such as UPS&#x2F;FedEx&#x2F;pizza drivers.<p><i>&gt;It sets requirements for cars, rates and &quot;fires&quot; drivers, etc.</i><p>I&#x27;ve boldly said it before and I&#x27;ll boldly predict it again:      it is much more likely that Uber will tweak its &quot;control&quot; rules to act more like ebay&#x2F;craigslist&#x2F;AppleAppStore rather than switch to an employee model that pays for minimum hourly wages, worker&#x27;s comp, health benefits, liability insurance, etc.  The auction sellers and the iPhone iOS programmers uploading apps are not &quot;employees&quot; of Ebay and Apple and it&#x27;s much more realistic for Uber to relax some rules to be more like Ebay rather than be more like FedEx.<p>Why?  Because we (the riders) won&#x27;t pay for the higher fares (probably more than 2x the costs) to fund an employer&#x2F;employee model.<p>If Uber <i>did</i> switch to a more expensive &quot;employee&quot; organization, a new competitor that deliberately structured itself more like Ebay&#x2F;Craigslist and utilized true &quot;contractors&quot; as drivers would undercut them.  Riders en masse would pick the cheaper fare from a contractor rather than the 2x fare for an Uber employee.<p>I think some observers confidently think that Uber will ultimately lose the &quot;employee&quot; classification legal battle and there will be a financial windfall for the 160,000+ drivers.  For the reasons I stated above, that is not going to happen.