A U.S. appeals court on Tuesday decided to move forward with a case regarding whether UberBLACK drivers, who offer luxury Uber rides, should be classified as employees rather than contractors under the Fair Labor Standards Act.
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The move comes as the ride-hailing company and its biggest competitor, Lyft, face pressure from workers and lawmakers to classify independent gig workers as employees so they receive the required employee benefits that range from state to state.
The court decided that summary judgment, or a decision based on the legal papers alone, was inappropriate "because genuine disputes of material facts remained," but Keller Lenkner LLC, the law firm representing drivers in the appeals case, is already claiming a win.
Travis Lenker, a managing partner at Keller, said the decision was "a big win for Uber drivers and gig-economy workers throughout the U.S." in a series of Tuesday tweets.
"We're grateful for the court's decision, and we look forward to the proceedings in the district court as well as the opportunity to use this ruling to advocate for our clients throughout the country," he added.
The lawyers for the drivers said that the decision to overturn a lower court's decision and proceed to hearings gives the drivers' attorneys the chance to make their case directly to a judge.
"Our clients are UberBLACK drivers in Philadelphia. They challenged Uber's classification of them as independent contractors ... which denies them a minimum wage and other protections to which they're entitled under federal and state law," Lerkner wrote. "The district court held that there was no way our clients could prove they deserve to be treated as employees under [FLSA]. ... The Third Circuit overturned that ruling and found numerous flaws in the lower court's analysis."
An Uber spokesperson said the company disagreed with the court's decision to move forward and the company would be considering all its options.
"The Third Circuit did not rule that drivers using UberBLACK in Philadelphia should be classified as employees," an Uber spokesperson told FOX Business. "It merely found that there were fact issues that could not be decided in a summary judgment motion."
The court said it "relied heavily on the analysis in DialAmerica and other cases that had examined the use of internet or app-based programs for acquiring work" in the decision.
The 1984 Third Circuit case Donovan v. DialAmerica Marketing, Inc. set the foundation for six different factors to consider when distinguishing between employees and independent contractors.
Factors include: 1) whether the worker has control over the job, 2) the worker's opportunity to make or lose profit, 3) the worker's investment in materials needed to do the job, 4) whether the job requires a specific skill, 5) the job's permanence and 6) whether the worker's job is necessary for the employer's business, according to the New Jersey State Bar Association.
The case is the first in which a district court has addressed the Fair Labor Standards Act as it relates to gig employees.
"Plaintiffs claim that they are employees, and sue Uber for violations of minimum wage and overtime requirements under federal and state laws. Under the FLSA, employers must pay employees the applicable minimum wage for each hour worked, and, if an employee works more than forty hours in a given week, the employer must pay one-and-a-half times the regular rate for each hour subsequently worked," the decision reads.
"Plaintiffs contend that time spent online on the Uber Driver App qualifies as compensable time under the FLSA. Principal among Plaintiffs’ arguments is that Uber controls the access and use of the Driver App," it continues.
Uber and Lyft have said that laws requiring ride-hailing app companies to identify drivers as gig workers would drastically change the way their businesses operate.
California passed a gig-worker law in September, which officially went into effect in January. The new law identifies drivers as employees rather than contractors, and not everyone is happy about it.
"State legislators had the opportunity to expand benefits for hundreds of thousands of independent workers in California, a step Uber has been advocating for and one that other states already have taken," Uber said in a January statement to FOX Business. "Instead, they passed AB5 using a biased and overtly political process. ... We are joining a growing group of companies and individuals suing to ensure that all workers are equally protected under the law and can freely choose the way they want to work."