Circuit finds black-car drivers are not employees under the FLSA

A huge number of "black-car drivers" bring this Fair Labor Standards Act case against corporate entities that either own a "base license" that allows them to operate a black-car dispatch base in New York City or provide administrative support for the operation of the franchisor's dispatch bases. In other words, the drivers -- who operate a type of for-hire vehicles that provide ground transportation for people -- sue the defendants for unpaid wages. The issue here: did the defendants employ the plaintiffs under the FLSA and state law? The Court of Appeals says the defendants are not employers.

The case is Saleem v. Corporate Transportation Group, decided on April 12. Only employers are liable under the FLSA. If the plaintiffs are independent contractors, they cannot sue for lost wages under the Act. The plaintiffs' black-car franchises are affiliated with defendants, some of whom provide administrative support for the operations. The plaintiffs mostly purchased their franchises from the franchisor defendants, and the franchise agreement has a non-compete clause that prevents them from driving CTG customers without processing payment through CTG. But these agreements do not prevent the drivers from transporting non-CTG customers. While the franchise agreements come with a rule book governing standards of conduct, plaintiffs still enjoyed considerable autonomy in their day-to-day affairs, such as deciding when and how often to drive, where they worked and to accept or decline jobs that were offered. The drivers could also work for other entities.

This back-and forth with respect to driver autonomy and defendant control over them lies at the heart of this case. An employer under state and federal law is able to control the plaintiff. Without sufficient control over the plaintiff, the defendant is not an employer and the plaintiff is merely an independent contractor who cannot invoke the FLSA and state law wage protections. This is a totality of the circumstances test, and the facts are typically quite involved, so much that these decisions can be lengthy and complicated, as reflected in the 14 month time period the Court of Appeals (Livingston, Leval and Carney) took to issue this decision. The Court finds that plaintiffs were independent contractors.

Despite the broad sweep of the FLSA’s definition of “employee,” the record here does not permit the conclusion that Plaintiffs were employees, but instead establishes that they were in business for themselves. As discussed below, Plaintiffs independently determined (1) the manner and extent of their affiliation with CTG; (2) whether to work exclusively for CTG accounts or provide rides for CTG’s rivals’ clients and/or develop business of their own; (3) the degree to which they would invest in their driving businesses; and (4) when, where, and how regularly to provide rides for CTG clients. While none of these facts is determinative on its own, considered as a whole with the goal of discerning the underlying economic reality of the relationship here, the district court correctly determined that Plaintiffs are, as a matter of law, “properly classified as independent contractors rather than employees for purposes of the FLSA.”