In the first ruling under federal law involving Uber, a U.S. District Court Judge in Pennsylvania has just ruled that limousine drivers for UberBLACK are independent contractors under the Fair Labor Standards Act. The FLSA sets the minimum wage and overtime rules for covered employees -- but independent contractors are not covered by the law. Therefore, much FLSA litigation centers around who is legally an employee and who is a contractor.
Courts consider the totality of the situation when determining whether a worker is legal an employee or a contractor, taking into account a variety of factors, such as:
- Are the worker's services integral to the company's business?
- Does the worker operate as an independent business organization?
- Has the worker invested significantly in facilities and equipment?
- How long-term or permanent is the relationship?
- How much control does the company exercise over the worker's behavior and the details of the work?
- Does the worker have an opportunity to increase profits through good management?
- Does the worker's success depend on initiative, judgment or foresight in open market competition?
If the worker is determined to be legally an employee, the FLSA entitles them to at least the federal minimum wage and 1-1/2 times their regular rate in overtime for every hour they work beyond 40 in any workweek. The FLSA also limits child labor and has recordkeeping requirements.
Beyond that, employees are legally entitled to other employment benefits, such as employer-paid workers' compensation and payroll taxes, access to unemployment insurance, any employer-provided benefits and more.
Are 'gig economy' workers really independent contractors?
There is a lot at stake, and today's "gig economy" depends on its workers being independent contractors. Whether they actually are has been an open question, however. The Pennsylvania judge weighed the factors and found that UberBLACK employees, at least, can be considered contractors under the FLSA.
Often in these cases, the crucial factor seems to be the degree of control the company exercises over the worker. Here, the judge ruled that UberBLACK does not exercise sufficient control over the drivers to be considered their employer. In particular, the drivers feel free to work when they want and stop working when they wish. Between assignments, they can run errands, nap or even smoke cigarettes.
The plaintiffs have indicated they will appeal to the 3rd Circuit Court of Appeals. That case would be the first "gig economy" FLSA case heard at the federal appellate level.
If you work in the "gig economy" and believe you should be legally considered an employee, contact an employment law attorney for an evaluation of your situation.