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Motion For Summary Judgement Granted To Uber After Determining Plaintiffs Did Not Meet Their Burden Of Proving They Were Employees Of Uber

May 30th, 2018

In Razak v. Uber Techs., Inc., CV 16-573, 2018 WL 1744467 (E.D. Pa. Apr. 11, 2018), the District Court for the Eastern District of Pennsylvania granted Defendant, Uber Technologies, Inc.’s (“Uber”), motion for summary judgment after determining Plaintiffs did not meet their burden of proving they were employees of Uber under federal and state minimum wage and overtime laws.  The three Plaintiffs, who each owned limousine companies that drove for UberBLACK, filed a putative class action seeking, inter alia, back pay under the Fair Labor Standards Act (“FLSA”), the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law.  Based on the six-factor analysis adopted by the Third Circuit in Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985), the court determined that UberBLACK drivers are independent contractors, not employees.

The Plaintiffs each participated in Uber’s limousine service, known as UberBLACK, through Uber’s ride-sharing mobile phone application (“Uber App”).  To receive trip requests through the Uber App, drivers are required to log into the Uber App and indicate they are “online” or available to receive trip requests through the Uber App.  When a driver receives a trip request, they can choose to accept the trip or, if they have not accepted the trip within 15 seconds, the trip request is deemed rejected. The trip request then goes to the next closest “online” driver until the request is accepted.  If no driver accepts the trip, the request goes unfulfilled and Uber cannot require any driver to accept a trip.  If , subject to Uber’s cancellation policy.

The Uber App also has mechanisms that may limit a driver’s ability to accept trip requests.  For example, if a particular driver rejects three trips in a row, the Uber App automatically goes from “online” to offline.  However, a driver that goes offline via this process can immediately go back online.  Further, the Uber App will log off drivers for six straight hours if a driver reaches Uber’s twelve-hour driving limit.  Drivers can also lose their ability to access the Uber App for violating other safety and quality procedures contained in the agreements between the parties.

Donovan sets forth six factors for determining whether a worker is an employee: (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.

Consistent with the Supreme Court’s guidance in Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), “neither the presence nor absence of any particular factor is dispositive, and thus, courts should examine the circumstances of the whole activity with a consideration, as a matter of economic reality, of whether the individuals are dependent upon the business to which they render service.” Donovan, 757 F.2d at 1382-83 (internal citations and quotation marks omitted). The court then applied the six factors to the relationship between Uber and UberBLACK drivers.

First, the court analyzed, “the degree of the alleged employer’s right to control the manner in which the work is to be performed.” Analyzing the written agreements between the parties, the court determined the language indicated to a lack of control by Uber. The agreements not only characterized the extent Uber could control drivers, it detailed many ways Uber was not entitled to control the drivers. Despite Uber’s right to deactivate or “block” drivers that failed to meet certain quality and/or safety standards, drivers had the ability to hire sub-contractors, work for competing companies and determine their own working hours.  The court noted that under Uber’s unique business model, the fact that Uber does exercise some control when UberBLACK drivers are Online does not convert UberBLACK drivers into employees.

The second factor, “the alleged employee’s opportunity for profit or loss depending upon their managerial skill,” strongly indicated Plaintiffs’ status as independent contractors.  UberBLACK drivers are permitted to work as much or all little as they would like, choose the hours they worked and drive wherever they choose.  Further, Plaintiffs were free to choose not to accept a trip through Uber when the opportunity for profit was greater through other means.  While the Uber App determined whether each driver received a given trip request and the amount the passenger was to be charged, the “profit and loss” factor does not require Plaintiffs be solely in control of their profits and losses.

Plaintiffs conceded that the third factor, “the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers,” weighed against their status as employees based on the need to purchase or lease their vehicle.

The fourth factor, “analyzing the level of special skill required by Plaintiffs,” supported a finding of employee status, however, it carried little weight towards Plaintiffs’ overall burden.  While driving is not generally considered a “special skill,” Plaintiffs were required to maintain a high level of customer service. For example, Uber requires drivers to maintain a “driver rating” of at least 4.7 out of 5 stars.  Although these requirements did not necessarily rise to the level of “special skills,” it distinguished Plaintiffs from other drivers, such as those delivering food.

The fifth factor, “the degree of permanence of the working relationship between the worker and alleged employer,” also weighed heavily against Plaintiffs.  Plaintiffs asserted that their multiple years driving for Uber and “many hours per week” they drove established relationship permanence.  The court noted this contention, although facially persuasive, reflected Plaintiffs’ choice and is also “simply untrue.” Plaintiffs were free to choose how long and for how many hours they wished to work, with no required notice as to when, where, or for how long they would work.  Plaintiffs’ had the ability to work as little or as much as they wanted, the hallmark of relationship impermanence.  The fact that Plaintiffs used this freedom to, at times, work many hours per week did not weigh in favor of “employee” status.

The final factor, “whether the service rendered is an integral part of the alleged employer’s business,” favored employee status, but only to a slight degree. While acknowledging it is beyond dispute that Uber could not function without drivers, the court made note that UberBLACK’s limousine service is only one of many driving services provided through the Uber App.

In total, only two factors weighed toward the drivers’ status as employees, and only to a slight degree.  Based on the totality of the circumstances, Judge Baylson held the record was insufficient for Plaintiffs to meet their burden of showing that they are employees.  Accordingly, the court granted Uber’s motion for summary judgment.

Opinion by Michael Baylson, United States District Judge.

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