A Deputy labor commissioner gave a ruling in Uber's case saying that Uber driver is not an independent contractor, but an employee of the company.

A California labor commission gave the ruling this month for Uber, the 'ride-sharing' company that has become a bogeyman to some folks in the Capitol and the bureaucracy.

Citing the reason why an Uber driver is not an independent contractor, but an employee, a deputy labor commissioner said that Uber regulates drivers and dictates many of their rules.

If Uber, Lyft and other similar ride-sharing companies start treating their drivers as their employees and paying every manner of cost, and following every part of the labor code that applies to employees, their competitive advantage and business model will crumble.

Uber, Lyft and such similar companies have revolutionized the transportation industry and forced taxicabs to adapt to a new competitive situation.

It is known that Uber doesn't hire drivers, but uses a phone app as a conduit to hook them up with people who are seeking rides.

Uber and other companies like it, take a cut of each fare. Many consumers love the service. It's hard to argue that it's been anything but a widespread boon to travelers and drivers.

According to a Bloomberg Business report, the labor ruling challenged Uber's entire business model.

This model is far cumbersome and costly to build a brick-and-mortar business, hire employees, staff up a human-resources department, pay Social Security, retirement and health care, and follow all those limitations on the length of a work week, overtime pay and so forth.