Ohio Wage and Overtime Attorney Best Answer: What should I do if my boss misclassifies me as an independent contractor so he does not have to pay me overtime wages? Do operators of car services fall under the FLSA? Is a limo driver considered an employee or independent contractor?
Uber is great. With a couple of clicks on a smart phone, a user can arrange to be picked up by a driver in a clean, late-model car and taken to the destination of her choice. Uber is generally cheaper than a taxi service, and it’s quicker and simpler to arrange an Uber ride than it is to call or hail a cab.
Lately, though, Uber has been in the news for the wrong reasons. A growing number of lawsuits allege that Uber and its competitor Lyft misclassify their drivers as independent contractors, instead of employees, and, in doing so, the two companies violate the Fair Labor Standards Act (“FLSA”) and state wage laws. As our wage and hour attorneys have previously blogged about, the FLSA requires that covered, non-exempt employees be paid at a rate of at least $7.25 an hour, plus time and one-half their regular hourly rates for all hours worked beyond forty per workweek. (See Top Wage and Hour Lawyer Reply: As A Salaried Employee, Am I Exempt From Overtime Pay?; Should I Be Paid Overtime Even If I Have The Title Manger? Top Ohio Wage and Hour Lawyer Reply; and What Is The Minimum Salary To Be Exempt From Overtime Pay Requirements? I Need A Lawyer!) Ohio’s R.C. § 4111 provides protections similar to the FLSA. Our overtime law lawyers have also blogged that unlike employees, true independent contractors need not be paid in accordance with the FLSA’s or Ohio’s overtime and minimum wage provisions, which makes misclassification a big deal. (See Am I Being Misclassified As An Independent Contractor?; My Boss Refuses To Pay Overtime Because I’m Classified As An Independent Contractor. I Need A Lawyer!; and Employee or Independent Contractor? Your Employer May Be Misclassifying You.).
Unlike a traditional taxi or black car services, Uber drivers use their own personal cars to transport riders. Before being allowed to “partner” with Uber, a driver, must undergo a background check, pass a “city knowledge test,” attend an interview with an Uber employee, and provide proof of insurance, as well as information about her vehicle. An Uber driver is then paid a fee upon completion of each ride she provides an Uber user. Uber bills itself as a technology company and not a transportation company. Uber contends that it merely develops and markets an app that helps connect drivers and passengers and that Uber drivers are independent contractors and not employees.
A lot hinges on whether or not these drivers are independent contractors or employees. If Uber and Lyft drivers are classified as employees, then the companies must pay the drivers overtime and minimum wage and, under some states’ laws, must reimburse the drivers for certain expenses. Additionally, if Uber and Lyft are deemed employers, they can be sued for damages if one of their drivers negligently causes an injury.
Courts generally look to a number of factors in determining whether a worker is an employee or an independent contractor. Among these factors are: (1) the extent to which the worker’s services are an integral part of the employer’s business; (2) the permanency of the relationship; (3) the amount of the worker’s investment in facilities and equipment; (4) the nature and degree of control by the principal; (5) the worker’s opportunities for profit and loss; and (6) the level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent enterprise.
As is the case with many issues, California is ground zero in the Uber wage debate. A recent ruling by the California Labor Commission held that Uber drivers are employees and ordered the company to pay a former driver $4,152 in reimbursable business expenses. In Berwick v. Uber, the Commissioner found that Uber controlled the tools of the job, in that drivers must register their cars with Uber and may not use cars older than ten years. Further, Berwick found that Uber had sole discretion in setting pricing and is “involved in every aspect of the operation,” and “by obtaining the clients in need of the service and providing workers to conduct it, Defendants retained all necessary control over the operation as a whole.” Most importantly, Berwick found that “without drivers such as Plaintiff, Defendant’s business would not exist.”
A pair of current federal cases in California are also grappling with the issue of whether Uber and Lyft drivers are employees or contractors. In both O’Connor v. Uber and Cotter v. Lyft, judges recently decided that the drivers cannot be held to be independent contractors as a matter of law, and that summary judgment on that issue in favor of the companies was inappropriate. Both O’Connor and Cotter point out that the traditional tests of employee vs. contractor provide outdated tools to use in deciding these matters in the current “sharing economy.”
Judge Edward Chen, in O’Connor, was not convinced by Uber’s argument that it is merely a technology company, matching riders with drivers, writing that, “Uber does not simply sell software; it sells rides. Uber is no more a ‘technology company’ than Yellow Cab is a “technology company” because it uses CB radios to dispatch taxi cabs . . . Uber only makes money if its drivers actually transport passengers.”
Chen’s analogy to taxi companies could prove problematic for the plaintiffs in the case, as well as prospective plaintiffs. Section 13(b)(17) of the FLSA exempts from its overtime protections “any driver employed by an employer engaged in the business of operating taxicabs.” According to the U.S. Department of Labor’s Field Operations Handbook: “The taxicab business consists normally of common carrier transportation in small motor vehicles of persons and such property as they may carry with them to any requested destination in the community. The business operates without fixed routes or contracts for recurrent transportation. It serves the miscellaneous and predominantly local transportation need of the community. It may include such occasional and unscheduled trips to or from transportation terminals as the individual passengers may request, and may include stands at the transportation terminals as well as at other places where numerous demands for taxicab transportation may be expected.”
Of course, this would mean that Uber and Lyft drivers would need to get taxi licenses, which are expensive and would make it more difficult for these companies to make money given that one of the large advantages of Uber is the lower cost than traditional taxis.
A few cases have found that companies who provide taxi-like services, such as limousine companies, fall within either the FLSA’s or a state law’s taxi exemption, while other cases have reached the opposite result.
In some respects, Uber and Lyft seem like “taxicab” companies as described by the DOL’s Handbook. The drivers provide mostly local transportation and they carry passengers to requested destinations. Using Uber or Lyft, is a bit like “hailing” or “flagging down” a cab. But are Uber rides unscheduled? Even an “on the fly” Uber ride is scheduled via the app and the app allows a user to schedule a ride well in advance of the actual ride. Of course, this something traditional cab companies also generally allow. Does the Uber user agreement constitute a “contract for recurrent transportation,” such that the exemption should not apply?
There are a lot of interesting questions in the Uber and Lyft cases that don’t have clear legal answers. Judge Vince Chhabria, in the Lyft case, wrote that “the jury in this case will be handed a square peg and asked to choose between two round holes.”
If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call (216) 291-4744.
The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.