There’s no cliché better than a Shakespeare cliché, and no Shakespeare cliché more cliché than referencing Hamlet. Duly noted and ignored. Let’s turn to Uber, the Prince of 555 Market St. in San Francisco. The company has of late been suffering the slings and arrows of outrageous fortune (it is currently valued at nearly $70 billion) and has taken arms against a sea of trouble. The ride-share company is currently embattled in litigation concerning intellectual property, invasion of customers’ privacy, securities fraud, antitrust, regulatory issues, race and gender discrimination, sexual harassment and a rear-guard battle from taxicabs—those old-timey transporters that in Shakespeare’s day would have been a guy with a horse and carriage.
We’re also starting to see litigation concerning the status of those who drive for Uber. Are they employees or independent contractors? As those of us in workers’ compensation know, this makes the difference between an injury covered by workers’ compensation and one that is not. Taxi drivers have traditionally not been viewed as employees of cab companies. As far back as at least 1924, our courts refused to find cab companies were the “master” and drivers the “servant” in the tort context, as in Wright V. A.&S. Wilson, 83 Pa. Super. 487 (Pa. Super. 1924) (“A man does not become answerable for the negligence of a taxi driver, or of a carrier merely by specifying where he wishes to go or to have his property delivered.”).
The immediate thought is that drivers for Uber—which was founded in 2009—and its more likable little sibling Lyft—founded in 2012—are not employees any more than taxi drivers are employees of their cab companies or medallion owners. But there is some evidence that times may be a’changing (different Bard).
Consider the employment law case ongoing in Philadelphia’s Eastern District of Pennsylvania, brought against Uber in 2016 by Ali Razak and others, a prospective class of UberBLACK drivers who provide Uber’s limousine-like service. They asserted violations of the federal Fair Labor Standards Act, the Pennsylvania Minimum Wage Act, and the Pennsylvania Wage Payment and Collection Law. In a written statement quoted in The Legal Intelligencer’s Oct. 10, 2016, article on the case, the drivers’ lawyer averred: “There is something fundamentally wrong with a company that is worth 65 billion dollars but refuses to afford its drivers—who are the heart and face of the business—basic workplace rights.”
Judge Michael Baylson denied Uber’s motion for partial summary judgment in an entertaining September 2017, decision, which begins with a reference to Shakespeare’s Twelfth Night (impressive). The decision allows discovery to go forward on the question whether UberBLACK drivers are employees or independent contractors.
This is, of course, federal law in federal court, and specific to UberBLACK drivers, whose connection with Uber entails “on-call time” that is not present in the set up of “regular” Uber drivers. But should the matter go to decision on the merits, it may have great implications for the workers’ compensation bench and bar because of the threshold question Judge Baylson will answer: “The parties must now promptly embark on completing any appropriate discovery on the issue of whether the plaintiffs are employees or independent contractors under the FLSA.” as in Razak v. Uber, No. 16-573 (E.D. Pa. Sept. 13). As Judge Baylson stated in a previous decision denying Uber’s motion for judgment on the pleadings, “The first inquiry in most FLSA cases is whether the plaintiff has alleged an actionable employer-employee relationship.”
The FLSA factors at issue in Razak are terms and concepts known to workers’ compensation practitioners: the degree of Uber’s right to control its drivers’ work (and access to work), its restriction of drivers’ personal activities while logged in, online, and on-call, whether drivers’ time spent logged in, online, and on-call is “predominantly for the benefit of the employer rather than the employee,” and whether drivers so situated are “meaningfully in control of their time.” In light of the many parallels between FLSA and workers’ compensation in analysis of employment relationship questions, our bench and bar will almost certainly keep an eye on Razak.
Elsewhere around the country, ride-share drivers have begun seeking clarification of their status by state administrative regimes such as unemployment and fair labor laws. And some adjudicators in liberal jurisdictions have found for the drivers, albeit in decisions unbinding on non-litigants. In June 2017, a New York administrative law judge held in the unemployment context: “The overriding evidence establishes that Uber exercised sufficient supervision, direction and control over key aspects of the services rendered by the claimants, such that an employer-employee relationship was created. I, conclude, therefore that the claimants and others similarly situated are/were employees of the employer Uber,” New York State Unemployment Insurance Appeal Board Case No. 016-23858, June 9, 2017 (plaintiffs’ names redacted).
In 2015, a California Labor Commission decision held an Uber driver could recover nearly $4,000 from Uber as reimbursable business expenses on the basis of its finding that the driver was an employee because Uber vets prospective drivers via background and DMV checks, dictates the age of drivers’ cars and demands registration of drivers’ cars, monitors ratings and controls access to itself through the power to terminate a driver for low ratings, controls use of its app to its own registered drivers, and controls the payment, as in Berwick v. Uber, California State Labor Commission Case No. 11-46739-EK, June 3, 2015.
Correspondingly in federal court, Northern District of California Judge Edward Chen denied Uber’s motion for summary judgment and then granted class certification on a suit by Uber drivers, not just for UberBLACK but also for UberSUV and regular UberX, alleging violations of the California Labor Code. Judge Chen found that the plaintiffs sufficiently established the basis for a finding of employment status: “Although the court’s conclusion based on the record facts can likely stand on logic and common sense alone, the case law makes abundantly clear that the drivers are Uber’s presumptive employees,” as in O’Connor v. Uber, No. C-13-3826-EMC (N.D. Cal. March 11, 2015.
A short section near the end of Judge Chen’s September 2015 decision on class certification reveals the intensity of the clash. Uber’s defense team went after plaintiffs’ counsel personally, asserting that she could not adequately pursue the case “because she is overextended given all of the multitude of cases she is currently prosecuting against Uber and similar firms.” Judge Chen did not go for that, but Uber’s willingness to test the boundaries of litigation pleading civility shows how fiercely it fights when under attack.
As we know, where New York and California go, the rest of the country often says no. For example, in the unemployment context, the Florida Third District Court of Appeals held: “Due in large part to the transformative nature of the internet and smartphones, Uber drivers like McGillis decide whether, when, where, with whom, and how to provide rides using Uber’s computer programs. This level of free agency is incompatible with the control to which a traditional employee is subject,” as in McGillis v. Department of Economy Opportunity & Rasier d/b/a Uber, No. 3D15-2758 (Feb. 1. 2017). Recognizing that none of these cases specifically addresses workers’ compensation, all share the central question whether ride-share drivers are employees or independent contractors, a primary question in workers’ compensation and one worth watching as litigation proliferates and ride-sharing becomes ever more prevalent.
Specific to workers’ compensation concerns, the spread of litigation across the country concerning employment status appears to have led Uber to develop a sort of in-house injury insurance pilot program available since May 2017 in Pennsylvania and seven other states. Drivers can opt-in to the program, which is funded by a by-the-mile increase of five cents to the consumer and a corresponding charge of 3.75 cents per mile to the driver. If injured while driving for Uber, the driver may receive up to half his or her average weekly Uber earnings while injured, along with medical benefits up to $1 million (free of deductible or co-pay expenses).
There are red flags: the program was developed by Uber with the input and assistance of insurance companies, but apparently no representation from claimant-side workers’ compensation specialists. It entails a charge levied upon the driver (3.75 cents per mile) rather than premiums paid by Uber. Seeming to bear these concerns out, a copy of an “explanation of coverage provided to drivers in Illinois,” obtained by independent online journalism site The Intercept, states: “THIS INSURANCE IS NOT WORKERS’ COMPENSATION INSURANCE,” and any dispute will be submitted to a binding arbitration proceeding, with the driver expressly renouncing any right to claim workers’ compensation or join a class-action lawsuit. The program is also critiqued as a craven publicity gambit against those slings and arrows that Uber seems unable to avoid.
These are serious charges, as is the obvious elephant in the equation: if Uber and its ilk are found to be employers in the traditional sense, thus responsible for, among other things, workers’ compensation insurance where they operate, the price of a ride will almost certainly rise, much more than the five cents per mile currently charged for the pilot program. If a ride that now costs $10 jumps to $12, $15, or $20, the convenience may no longer be worth the cost, even for those of us who work in workers’ compensation and support the development of better protection for drivers. What then? Back to the days of taxis and waiting for the bus? For certain, litigation here and around the country on ride-share drivers’ employment status is far from over. The stakes are high and Uber has shown how fiercely it will fight to defend its wealth and position. Having eaten like wolves, they will fight like devils.
Susan Nanes is an associate at Pond Lehocky Stern Giordano. She is a former law clerk to retired Pennsylvania Chief Justice Ronald D. Castille and focuses her practice exclusively on workers’ compensation.