951 F.3d 137
3rd Cir.2020Background
- Plaintiffs are Philadelphia UberBLACK drivers who operate through incorporated transportation companies (ITCs) and sign Uber’s Technology Services Agreement and a Driver Addendum to use the Driver App.
- Uber sets fares, handles customer payments, routes trip requests through the Driver App, and takes commissions; drivers accept or decline requests, may be deactivated for low ratings or certain conduct, and are subject to app-imposed limits (e.g., daily hours).
- Plaintiffs sued under the FLSA, Pennsylvania Minimum Wage Act, and WPCL, alleging they are employees entitled to minimum wage and overtime; plaintiffs argued time spent "online" on the app is compensable and that Uber controls their work.
- The District Court granted summary judgment for Uber, applying the DialAmerica six-factor test and concluding most factors favored independent-contractor status.
- The Third Circuit vacated and remanded, holding that genuine disputes of material fact remain (especially on control and profit/loss), so summary judgment was improper and a factfinder must resolve those disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UberBLACK drivers are "employees" under the FLSA (DialAmerica test) | Drivers are economically dependent on Uber; app control and deactivation policies show Uber controls work | Drivers are independent entrepreneurs who set schedules, hire helpers, and use Uber as a lead-generation platform | Remanded — genuine factual disputes preclude resolving employee status on summary judgment |
| Whether the District Court properly granted summary judgment | Summary judgment was premature because core DialAmerica-factor facts are disputed | Summary judgment appropriate because contractual terms and ability to work for others show no employment relationship | Vacated — material factual disputes require factfinder resolution |
| Right-to-control factor (manner of performance) | Uber controls key aspects (fare-setting, dispatch, deactivation, territory, app rules), limiting drivers’ autonomy while "online" | Uber does not set schedules, drivers can reject trips and work for others; contracts treat ITCs as independent | Disputed — the court found factual disputes over Uber’s "right to control," so the factor cannot be decided as a matter of law |
| Opportunity for profit or loss depending on managerial skill | Drivers lack meaningful control over pricing, dispatch, and access to requests; many rely predominantly on Uber for income | Drivers can increase earnings via hours, location choice, subcontracting, and working for competitors | Disputed — reasonable factfinder could find either way; not resolvable on summary judgment |
Key Cases Cited
- Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985) (adopts six-factor economic-realities test for FLSA employee status)
- Rutherford Food Corp. v. McComb, 331 U.S. 722 (U.S. 1947) (Supreme Court’s foundational guidance on determining "employee" status under the FLSA)
- Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (U.S. 1946) (plaintiff bears burden to prove uncompensated work under FLSA)
- Drexel v. Union Prescription Ctrs., 582 F.2d 781 (3d Cir. 1978) (focus on the employer’s right to control as central to classification)
- Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981 (9th Cir. 2014) (holding that ordinary driving is not a special skill for classification purposes)