Wednesday, March 4, 2020

Third Circuit on independent contractor classification of UberBLACK drivers

The gig economy continues to provide some great classification battles. Yesterday, the Third Circuit weighed in on UberBLACK drivers in Razak v. Uber Technologies, Inc. The drivers claim that they are employees entitled to minimum wage and overtime under the FLSA (and PA state laws, PMWA and PWPCL). The trial court granted summary judgment for Uber, concluding that the drivers were not employees (but rather independent contractors) as a matter of law.

The Third Circuit disagreed. First, it should be noted that Court applied the six DialAmerica factors:
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 trial court held that the drivers met only the fourth and sixth factors. Driving did not really require any special skill, and the drivers were "an essential part of Uber’s business as a transportation company." Uber "strenuously" disputed this finding, claiming instead that they are a technology company that supports the business of the drivers - but the Third Circuit merely says that it could be another disputed fact not suited for summary judgment.

The Third Circuit ran through the remaining factors, identifying additional factual disputes. The Court focused its attention on the first and second factors - the right to control and the risk of profit and loss. As just one example, drivers are free to drive for other services (like Lyft), but Uber will not allow drivers to do so while they are "online" with Uber.

Ultimately, the Third Circuit vacated the entry of summary judgment and remanded the case back to the district court for further proceedings. The Third Circuit did not take a position on whether the remaining factual disputes should be resolved by a jury or by the Court in a Rule 52 proceeding.

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