It going to vary from state to state, and country to country, but usually it's a combination of reduced labor rights and decreased liability. Contractors often

It going to vary from state to state, and country to country, but usually it's a combination of reduced labor rights and decreased liability. Contractors often don't have union or collective bargaining rights, they aren't entitled to healthcare or superannuation (for countries with such a thing), and often have to handle all of their own personal liability insurance and payroll tax. They also have no sick, parental or annual leave entitlements (again, for countries with such things), overtime/weekend/award rates or other kinds of employment protection. The cost of a labor force the size of Uber's would be huge if they did it on an employee basis.