Uber Luxury Drivers Dispute Will Ripple Beyond Trial’s Endgame

A worker classification trial involving three former drivers for Uber Black’s luxury car service is poised to have major implications for the gig economy once a Pennsylvania federal judge makes a call on if they’re protected by state and federal labor laws.

The long-running lawsuit in the US District Court for the Eastern District of Pennsylvania centers on whether the drivers were wrongfully misclassified as independent contractors who don’t have the same mimimum wage and overtime rights afforded to employees. The case is expected to be decided later this month after two juries have been unable to reach a clear determination on the drivers’ status as employees of Uber Technologies Inc. or contractors in business for themselves.

The legal question is one of the most contentious issues in the modern employment law arena, and a decision in the case could be used in similar lawsuits to determine whether millions of workers who provide services for on-demand app platforms like Uber, Lyft Inc., and DoorDash Inc. have been shortchanged pay and benefits.

“This will certainly have reverberations nationally, whatever happens,” said Anthony Rainone, a co-chair of the labor and employment practice at Brach Eichler LLC. If the drivers win at trial, Rainone said, plaintiffs’ attorneys will “be pushing hard in that particular courthouse to say, ‘Judge, look at this, we’ve already had a federal jury in Pennsylvania say this.’”

Alternately, “if Uber wins, they’re gonna dig their heels in and say to other plaintiffs’ attorneys in the country that have been in cases, ‘Hey, we won one, we’re gonna win the next ones also,’” he added.

The three drivers for Uber’s black car service say that the tech giant was their employer from 2013 to 2018 in part because it had control over fares and rider assignments, and could deactivate drivers from the app. But after a five-day trial and nearly two days of deliberations this month, a federal jury was unable to unanimously agree on how the drivers should be classified.

While jurors agreed that two of the drivers are employees under some factors outlined by state and federal worker classification tests, they also were neutral or leaning toward independent contractor status when considering other factors in the verdict issued June 18.

Judge Michael Baylson, who is presiding over the case, said he would attempt to put together a judgment based on the jury’s mixed findings. But it’s likely the judgment, regardless of what Baylson decides, will be appealed.

Multiple Factors

The case, first filed in 2016, is one of the rare Fair Labor Standards Act suits to go to trial. Attorneys say disputes involving worker classification typically land in arbitration or go to settlement before going to trial, in part because of the number of legal factors in play.

“This is an under-litigated issue, and the reason it’s under litigated is because workers can’t litigate it,” said Laura Padin, director of work structures at the National Employment Law Project. “There’s strong reason to believe these drivers are misclassified, and we just haven’t been able to get a ruling on it because of arbitration. So this would be a really big step in the right direction.”

When determining how workers should be classified for purposes of federal and state labor laws, courts have typically used a multi-part test that considers how much control a worker has over the job, the permanence of the job, and investments made by the worker and the employer, among other factors in the working relationship. This “economic realities” test is supposed determine whether a worker is economically dependent on the employer, and thus an employee, or is an independent contractor in business for themselves.

But those factors can point in different directions when it comes to employee or contractor status. A finding under one factor also isn’t indicative of a worker’s classification, instead the “totality” of the working relationship must be evaluated, according to FLSA case law and US Labor Department regulations.

Lawyers representing the drivers have found that convincing a jury to rule in their favor by using these multi-faceted tests is no easy task. The first trial in the Uber Black case in March was declared a mistrial after the jury was unable to unanimously agree on a verdict.

“To the average person on the street, how the heck do you come to a conclusion” on a worker’s status, Rainone said.

“You’re saying there’s six factors to consider. But you’re not saying which ones matter more than the others? And you’re saying you could have one out of six? And that could be enough,” he said.

Precedential Value

While the precedential value of a jury verdict is limited, legal observers say the ruling could still be used as ammunition against companies using similar classification arrangements to avoid the tax and legal liabilities that come with hiring a full employee.

Rainone predicted that the verdict would likely fit better into challenges against other ride hailing apps like Lyft, as opposed to delivery-only services like DoorDash.

But other attorneys said a ruling out of Philadelphia may just be another drop in the bucket.

“It’s just another one of the lawsuits in the gig-economy era for the drivers of any of these services, there’s been tons of them across the country,” said Michael Elkins, founder and partner at MLE Law. “So each time you get a ruling, it changes the landscape a little bit, depending upon what jurisdiction” the case is in.

“It’s certainly a sign, but it’s not necessarily dispositive overall,” he said.

Steve Rossi of Mitchell Silberberg & Knupp said the ruling could serve as another arrow in the quiver for parties involved in worker classification disputes.

“I think that probably what’s going to happen at the end of this is whoever wins is going to say, ‘This is a watershed verdict, first of its kind, super important,’” Rossi said. “And then whoever loses is going to water it down and say, ‘No, it’s just one, you know, sort of one data point among many.’”

The case is Razak v. Uber Technologies, Inc., E.D. Pa., No. 2-00573.