by Aby Rodriguez
Recently, there has been a flurry of lawsuits over the status of Uber drivers. Uber drivers want to be considered employees so they can reap “the benefits stipulated under the states’ labor laws.”[1] Uber, on the other hand, seeks to avoid the costs associated with full-time employees, namely paying their drivers a “minimum wage” and giving them Social Security benefits.[2]
Starting in 2013, Uber was hit with two major class-action lawsuits in California and Massachusetts.[3] The key issue in O’Connor and Yucesoy was “whether [Uber drivers] should be classified as independent contractors or employees.”[4] Ultimately, Uber prevailed by settling these two cases,[5] for just under $100 million,[6] and, most importantly, Uber could “continue to categorize drivers in those states as independent contractors.”[7]
Fast forward to February 1, 2017. In McGillis,[8] Uber secured another victory—only this time the decision was in Florida. Former Uber driver Darrin McGillis filed for reemployment assistance after his account with Uber was deactivated.[9] When Uber denied him reemployment assistance, McGillis filed a claim against Uber.[10] Initially, the Department of Revenue agreed with McGillis and found that he was an employee of Uber.[11]
However, Uber appealed and the Florida Department of Economic Opportunity reversed this finding, holding that McGillis was an “independent contractor and was therefore not entitled to reemployment assistance” in its final order.[12] Specifically, it found that Uber drivers, like McGillis, had “significant control over the details of their work” and “it appear[ed] that Uber operate[d] not as an employer, but as a middleman or broker for transportation services.”[13] McGillis then filed his appeal to the Third District Court of Appeal.[14]
On appeal, the Third District Court of Appeal noted that it was deciding one narrow issue: “whether McGillis performed transportation services using Uber’s software application as an ‘employee’ within the meaning of [section 443.1216, Florida statutes (2015)].”[15] To determine whether McGillis was an employee or independent contractor, the court reviewed “the parties’ agreement,” and considered “several factors outlined in the Restatement (Second) of Agency § 220.”[16]
Ultimately, Florida’s Third District Court of Appeal affirmed “the final order from the Department of Economic Opportunity concluding that Uber drivers are not entitled to reemployment assistance under section 443.1216 and denying McGillis’ claim for reemployment assistance.”[17] Specifically, the court found that “[McGillis’ and Uber’s] agreement unequivocally disclaim[ed] an employer-employee relationship.”[18] “In addition to reviewing Uber’s written agreement with drivers, which specifies that drivers are independent contractors who are not entitled to unemployment benefits, the court [also] examined the real-life working relationship between the parties.”[19]
The court found that “the parties’ actual practice reflect[ed] the written contract.”[20] “[Uber] drivers supply their own vehicles . . . and control whether, when, where, with whom, and how to accept and perform trip requests[;] work at their own discretion[;] and Uber provides no direct supervision. Further, Uber does not prohibit drivers from working for its direct competitors.”[21]
Finally, and most illustrative of the court’s points, “Uber sends each driver a Form 1099—an IRS form used to report payments to independent contractors [and] Uber does not provide fringe benefits.”[22] Although the court “acknowledged [that] at-will termination is usually associated with employment, the [court] rejected the idea that Uber is an employer simply because it can terminate drivers by deactivating their accounts.”[23]
After McGillis, the argument that Uber drivers are employees has weakened. McGillis is just one out of a series of decisions ruling in favor of Uber. Currently, “Uber has persuaded 11 other states to classify the company’s drivers as independent contractors: Arizona, California, Colorado, Georgia, Illinois, Indiana, New York, Pennsylvania, Texas, Utah and Virginia.”[24] Although it is likely that these types of lawsuits will arise again, it is highly unlikely that Uber drivers will be able to claim their coveted status as employees.
[1] Rich McCormick, Uber Settles Lawsuits to Keep Drivers as Independent Contractors in California and Massachusetts, Verge (Apr. 21, 2016, 11:57 PM), http://www.theverge.com/2016/4/21/11485424/uber-suit-california-Massachusetts-drivers-employee-contractor.
[2] Id.; Mike Issac & Noam Scheiber, Uber Settles Cases with Concessions but Drivers Stay Freelancers, N.Y. Times (Apr. 21, 2016), https://www.nytimes.com/2016/04/22/technology/uber-settles-cases-with-concessions-but-drivers-stay-freelancers.html?_r=1 (Uber has constantly rejected their drivers’ claims that they are employees, instead, Uber has argued that their drivers are independent contractors because of their “flexibility”).
[3] Yucesoy v. Uber Techs., Inc., 109 F. Supp. 3d 1259 (N.D. Cal. 2015) (This case originated in Massachusetts, but changed its venue to California for reasons unrelated to the independent contractor issue.); O’Connor et al v. Uber Techs., Inc., No. C-13-3826-EMC, 2013 WL 6407583 (N.D. Cal. Dec. 6, 2013).
[4] Travis Kalanick, Growing and Growing Up, Uber Newsroom (Apr. 21, 2016), https://newsroom.uber.com/growing-and-growing-up/.
[5] This settlement was later rejected for reasons unrelated to the independent contractor issue. See Mike Issac, Judge Overturns Uber’s Settlement with Drivers, N.Y. Times (Aug. 18, 2016), https://www.nytimes.com/2016/08/19/technology/uber-settlement-california-drivers.html.
[6] McCormick, supra note 1.
[7] Issac & Scheiber, supra note 2.
[8] McGillis v. Dep’t of Econ. Opportunity, No. 3D15-2758, 2017 WL 438423 (Fla. Dist. Ct. App. Feb. 1, 2017).
[9] Celia Ampel, Appeals Court: Uber Drivers Are Contractors, Not Employees, Daily Bus. Rev. (Feb. 1, 2017), http://www.dailybusinessreview.com/id=1202778155882?slreturn=20170103211303#comments.
[10] McGillis, 2017 WL 438423, at *1–*2.
[11] Id. at *2.
[12] Id.
[13] Rasier, LLC v. Fla. Dep’t. of Econ. Opportunity, No. 0026 2834 68-02, at 2 (Fla. Dept. Econ. Opp. Dec. 3, 2015), https://www.manatt.com/uploadedFiles/Content/4_News_and_Events/Newsletters/EmploymentLaw@manatt/FloridaDeptofEconomicOpportunityUberopinion.pdf.
[14] McGillis, 2017 WL 438423, at *2.
[15] Id. at *7.
[16] Id. at *7–9. The court noted that “among these ten factors, the ‘extent of control’ [was] the most important factor in determining whether a person is an employee or independent contractor.” Id. at *9.
[17] Id. at *14.
[18] Id. at *11.
[19] Ampel, supra note 9.
[20] McGillis, 2017 WL 438423, at *11.
[21] Id. at *12.
[22] Id. at *13.
[23] Ampel, supra note 9.
[24] Id.