Blank Rome Alert—Gig Economy More Employer-Friendly? Ask Uber!

Jason E. Reisman

Spoiler alert! Yesterday, the U.S. District Court for the Eastern District of Pennsylvania handed Uber what the Court described as Uber’s first win on its independent contractor classification for one class of its drivers: “This case is the first to grant summary judgment on the question of whether drivers for UberBLACK are employees or independent contractors within the meaning of the Fair Labor Standards Act ….” The case is Razak et al. v. Uber Technologies, Inc. et al. (Civil Action No. 16-573; 4/11/18).

Wow. Pretty significant progress for the gig economy’s foundational feature—the engagement of workers classified as “independent contractors.” I dare say that, with this decision, the gig economy may have just gotten a little more employer-friendly—at least here in Eastern Pennsylvania and at least as to Uber.

The Court pulled out one of those highly exciting, multifactor, legal balancing tests to evaluate Uber’s classification of the drivers as independent contractors. As you undoubtedly expect, such tests involve weighing each factor against the others, where no one factor is dispositive, and also examining all of the circumstances as a whole. In essence, as the Court noted, the test examines the situation “as a matter of economic reality.” The six factors the Court evaluated come from a 1985 decision by the U.S. Court of Appeals for the Third Circuit, 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 requires 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.

Using the above test, the Court found that four of the six factors weighed in favor of “independent contractor” status, with the other two only being somewhat supportive of employee status. Importantly, the Court noted that it was the plaintiffs’ burden to prove that they indeed were “employees”—and they failed to do that.

Stay tuned as this decision filters out—it will be interesting to see how and whether it impacts pending misclassification cases across the country against Uber, as well as other gig economy stalwarts, and likely even non-gig businesses. Though truly a fact-specific analysis, employment defense lawyers around the country are surely going to find creative ways to use this Uber decision to buttress arguments for their clients.

You (likely) heard it here first!

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