Independent Contractor Litigation Update

The U.S. Court of Appeals for the Ninth Circuit, in a surprise ruling, found that Phoenix airport taxicab drivers are properly classified as independent contractors under the Fair Labor Standards Act.  Applying the six-factor FLSA economic reality test, the court found that the cab drivers were not economically dependent on AAA Cab Services, which has a contract with the city to provide cabs at the airport.  The cab company had little control over the drivers: the company did not set the drivers’ schedules, maintain attendance logs, or require the drivers to work a minimum number of hours.  The drivers had opportunities for profit and loss because they paid a flat fee to lease the cabs and could work as much or as little as they wanted.  The drivers had independent businesses because they were free to provide services away from the airport, passed out business cards, and developed their own clientele.

However, independent contractors were the losers last month when an Illinois federal judge granted summary judgment for restaurant delivery drivers.  Applying the same six-factor economic reality test as the Ninth Circuit, the court found the drivers were misclassified under the FLSA and the Illinois Minimum Wage Law because the company set the drivers’ schedules, determined the delivery fees, and directed the drivers to more efficient routes.  In addition, the drivers did not make any investment in specialized equipment, did not have special skills and delivery was an integral part of the company’s business.

The Connecticut Supreme Court has clarified that the state “ABC” test does not require the contractor to provide services for more than one company; rather, the number of an IC’s clients is just one factor to be considered under the C prong of being “customarily engaged in an independently established trade, occupation, profession or business.”  In this unemployment case, the court found that appraisers providing services to Southwest Appraisal Group, LLC, an automotive damage appraisal business, were correctly classified as independent contractors.

Last month saw three big settlements of IC misclassification class actions:  Instacart and its “shoppers” settled for $4.6 million.  A California court granted final approval of the $27 million settlement between Lyft and about 95,000 of its drivers.  Global Media, LLC, the publisher of The Hollywood Reporter entered a $900,000 settlement with its freelance content providers.

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