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By: John P. McAvoy
On April 12, 2018, Uber Technologies, Inc. won its legal battle on the recurring issue of independent contractor misclassification when the Eastern District of Pennsylvania granted the company’s motion for summary judgment in Razak v. Uber Technologies, Inc., No. 16-cv-573 (E.D. Pa. Apr. 11, 2018) (Baylson, J.). In so holding, the court concluded that UberBLACK limousine drivers are not employees of Uber covered by state and federal wage laws.
Uber has been defending independent contractor misclassification cases in state and federal courts throughout the country since the company first opened its doors in 2009. Like several other ride-sharing companies, Uber has persistently maintained that its drivers are independent contractors and that, as such, the company is exempt from the state and federal wages laws of all jurisdictions in which it conducts business. Despite these salient arguments, the vast majority of courts have concluded that the workers were Uber employees subject to wage laws, indicating that a slightly different set of facts may have swayed the decision in the other direction. However, based on the Honorable Michael M. Baylson’s opinion in the Razak case, it appears this pattern has reached its natural end.
Unlike other federal and state courts that have addressed this issue, the Eastern District concluded that almost all of the factors the court considered weighed heavily in favor of classifying UberBLACK limousine drivers as independent contractors that do not enjoy the rights, benefits and securities provided by state and federal wage laws.
The Eastern District reached its decision by applying the six factor test set forth in Donovan v. Dialamerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985); namely, (1) the degree of Uber’s right to control the manner in which the work is performed (“Right to Control”); (2) the UberBLACK limousine drivers’ opportunity for profit or loss depending on their managerial skill (“Opportunity for Profit or Loss”); (3) the UberBLACK limousine drivers’ investment in equipment or materials required for their task, or their employment of helpers (“Employee Investment”); (4) whether the service rendered requires a special skill (“Special Skills”); (5) the degree of permanence of the working relationship (“Relationship Permanence”); and (6) whether the service rendered is an integral part of Uber’s business (“Integration”). The court found that all but two of the factors (i.e., Special Skills and Integration) strongly favored independent contractor status. Accordingly, the court concluded that the UberBLACK limousine drivers had not met their burden of showing that they are employees and that Uber is their employer.
If upheld on appeal to the Third Circuit, the Razak decision could finally put to rest the issue of whether Uber drivers and workers at companies that employ similar business models are being misclassified as independent contractors under the Fair Labor Standards Act and any state wage laws that test for independent contractor status in the same or similar fashion.
If you have any questions or would like more information about this case, please contact John P. McAvoy at [email protected].