UberBLACK Drivers May Be Employees, Not Independent Contractors

In another case of interest regarding the gig economy, the U.S. Court of Appeals for the Third Circuit reversed a federal district court ruling that UberBLACK drivers were independent contractors, finding there to be a material dispute over the determination of such status.

In determining employee status under the Fair Labor Standards Act, the Third Circuit applies a six-factor test adopted from the Ninth Circuit and set forth in Donovan v. DialAmerica Marketing, Inc.: (1) the degree of the alleged employer’s right to control the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers; (4) whether the service rendered required a special skill; (5) the degree of permanence of the working relationship; [and] (6) whether the service rendered is an integral part of the alleged employer’s business.

The Third Circuit applied this test in Razak v. Uber Technologies, Inc., in which UberBLACK limousine drivers claimed that they were employees entitled to minimum wage and overtime pay under the FLSA. The district court had found that the drivers were independent contractors based on a number of Uber’s assertions, including that the drivers could work for other companies, paid their own expenses, could hire subcontractors, could engage in personal activities while online, could work as much or little as they liked, and could choose not to accept trip requests, among other things. The Third Circuit found, however, that there were actually genuine disputes as to Uber’s right to control the drivers through its technology service and whether drivers could work for others while online for Uber. There were also disputes as to the drivers’ opportunity for profit or loss, as Uber set the fare, assigned trip requests, determined whether to refund or cancel passenger fares, and could change the drivers’ territories without notice. Accordingly, the case was remanded back to the district court for further proceedings.

The test articulated by the Third Circuit generally follows the one set forth by the Department of Labor in an opinion letter, as we discussed in our April 2019 E-Update. Notably, not all jurisdictions utilize the same test. The Fourth Circuit, for example, has adopted a stricter test that favors findings of employee status, as discussed in our January 2017 E-Update.