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By John Kristensen of Kristensen, LLP posted in Labor Laws on Friday, May 28, 2021.
U.S. Supreme Court Strikes Down Uber’s Bid to End “Contractor Lawsuit”

 

On Monday, May 17, 2021, the United States Supreme Court rejected Uber’s bid to avoid a lawsuit over whether drivers for UberBLACK – the rideshare company’s limousine platform – are employees and not independent contractors. According to Reuters, and reported on every major online media platform soon after, the Supreme Court’s reason for the rejected bid included leaving in place a lower court’s 2020 ruling which revived the lawsuit which was filed by three UberBLACK drivers in Pennsylvania. Read more here

 

At the lowest levels of court, where the lawsuit was initially filed in 2018, a judge had decided in favor of Uber. When the Plaintiffs appealed the decision in the 3rd U.S. Circuit Court of Appeals in Philadelphia, the Appellate judge made a reversal and threw out the 2018 decision which was made on the basis that, under the Fair Labor Standards Act, or FLSA, rideshare company drivers were independent contractors. The Supreme Court’s ruling on May 17 cited the Appellate Court’s decision and reasoning.

 

Being misclassified by Uber, the Plaintiffs had argued, violated federal minimum wage and overtime pay requirements, and also served to deny the Plaintiffs certain benefits and protections that they otherwise would have received as employees. This isn’t the first lawsuit of its kind that Uber has faced over the past few years, and it certainly won’t be the last. Uber, other rideshare companies such as Lyft, and many other companies in the “gig economy” that rely on the labor of independent contractors, have run into major issues surrounding the legal classification of workers.

 

These gig economy companies found that by classifying, for example, rideshare drivers as independent contractors, they avoid having to offer costly benefits such as health insurance, avoid having to pay taxes, and don’t have to pay a minimum wage. 

 

The Supreme Court decision seems to align to the Biden Administration’s stance on labor laws and worker classification. Earlier this month, on May 5, 2021, Biden’s Labor Department announced a reversal of the Trump Administration’s “independent contractor rule”, which leaned in favor of gig economy companies and their ability to classify workers as independent contractors. The Biden Administration’s announcement of the reversal had hurt Uber and Lyft stock swiftly. Read more about the announcement here.

 

The rideshare industry isn’t the only industry that relies on gig labor. The exotic dancer industry has seen gentlemen’s clubs around the nation historically take advantage of club talent by misclassifying dancers as independent contractors, thus avoiding paying a minimum wage and overtime, not offering benefits such as insurance, and charging “house fees” and forcing illegal tip sharing. The tides are turning in this industry as well, with recent rulings going in favor of dancers.

 

Kristensen LLP has years of experience, and has successfully represented its clients in labor law violations. Call today for a free, confidential consultation!

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