Third Circuit Remands UberBLACK Driver Classification

The Third Circuit Court Of Appeals has ruled in favor of UberBLACK drivers in the case Ali Razak et al. v. Uber Technologies. Plaintiffs Ali Razak, Kenan Sabani and Khaldoun Cherdoud appealed the grant of summary judgment for holding that UberBLACK drivers were independent contractors, not employees under the Fair Labor Standards Act (FLSA) and other state laws. The Third Circuit ruled in favor of the drivers, vacating the District Court’s grant of summary judgment for Uber and remanded for further proceedings.

The Third Circuit stated that because of a significant dispute of material facts it will “remand to the District Court as summary judgment was inappropriate.” For example, both parties disagree about who exerts control over the drivers’ work: Uber or the drivers.  

There was also a dispute over the “opportunity for profit or loss depending on managerial skill.” While the District Court ruled in favor of independent contractor status, Uber controlled: the fare; which driver receives a trip request; the decision to refund or cancel a passenger’s fare; and a driver’s territory. While drivers can drive for competitors, Uber puts obstacles in place for those who choose to do so. Therefore, the Third Circuit held that the court below could have reasonably ruled in Plaintiffs’ favor.

Another area of materially disputed fact is the permeance of the relationship between the parties, the court found. Uber can place drivers offline and drivers can drive whenever they choose without a minimum amount of time spent driving. The Third Circuit stated that summary judgment was inappropriate, and the material factual disputes must be resolved by the district court.

Appellants are UberBLACK drivers in Philadelphia. They accused Uber of violating FLSA, the Pennsylvania Minimum Wage Act (PMWA), and the Pennsylvania Wage Payment and Collection Law (WPCL)’s minimum wage and overtime requirements. Each owns an independent transportation company (ITC), which is a requirement to drive for UberBLACK. The drivers enter a technology service agreement with Uber, which includes a software license and online services agreement, which allows drivers to use the Uber app to obtain leads and rides. The agreements and Driver Addendum outlines a variety of elements of their relationship. They have sued Uber for violating minimum wage and overtime requirements and argue that they are employees. They argue that time spent on the app counts as the time they should be compensated for, and they note that Uber controls access to the app. For example, once online a driver can accept a trip request, if not accepted within 15 seconds of appearing on the screen it is considered rejected and moves to the next screen. If a driver “rejects” three trips in a row, the driver is considered offline and cannot accept more trips. Uber also sets the fares for drivers. Uber also logs drivers off after 12 hours.

Uber has stated that the drivers are not employees and therefore they are entitled to summary judgment. Uber states that UberBLACK drivers are entrepreneurs who use Uber’s software to find trips, Uber states that they are free to get paid from other avenues of work and can use the app as much as desired.

Appellants Ali Razak et al. are represented by Sacks Weston Diamond, as well as Keller Lenkner. Defendant Uber is represented by Littler Mendelson.