03-11-2020
The Third Circuit Court of Appeals has overturned summary judgment in favor of Uber on the question of whether UberBlack drivers are employees.UberBlack offers customers high-end black cars with professional drivers. The drivers are required to form independent transportation companies (ITCs). Each ITC contracts with Uber, enabling them to use the technology service to generate leads. 75% of UberBlack drivers use Uber’s automobile insurance. The UberBlack drivers alleged that Uber violated the minimum wage and overtime requirements of the Fair Labor and Standards Act (FLSA). FLSA does not protect independent contractors.
After the district court granted summary judgment to Uber, the Third Circuit Court of Appeals revived the case. Utilizing the six-factor test outlined in Donovan v. DialAmerica Marketing Inc. to determine whether someone is an employee or independent contractor, the court looked at: (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 on his on managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment or 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.
Finding genuine issues of material fact, the circuit court concluded that summary judgment was not appropriate, particularly with respect to the first two elements. Whether Uber had the right to control the drivers was contested between the parties. UberBlack drivers were entitled to reject trips for any lawful reason, but if they refused three in a row, they were moved offline and could not accept additional trip requests. Uber set the fees and logged off drivers for six hours once they reached Uber’s 12-hour driving limit. The drivers believed they were “employees” because they were controlled by Uber while online and were an integral part of Uber’s business. Uber contended that UberBlack drivers were able to work for other companies, paid their own expenses, and may even hire workers for their own ITC. Drivers also participated in personal activities while online, such as working for other rideshare companies, running errands, sleeping, and so on. The Uber drivers disagreed, asserting that they were not able to work for competitors while online, and the company strictly regulated their hours. The court of appeals also questioned whether the drivers had the opportunity to manage profit and loss. Uber determined the fare, which drivers received trip requests, whether to refund or cancel a passenger fare, and a driver’s territory. Advertising and price setting were also controlled by Uber.