‘Black Car’ Drivers in NYC Ruled Contractors, Not Employees

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Kevin McGowan

Drivers of “black cars” in the New York City area who have franchise agreements with dispatch companies are independent contractors, not employees entitled to wage protections, a federal appeals court ruled ( Saleem v. Corp. Transp. Grp., Ltd. , 2017 BL 119627, 2d Cir., No. 15-88, 4/12/17 ).

“This decision should have far-reaching effects across the country,” not only for the black car industry, but for “putative employers” in other industries, said Evan Spelfogel of Epstein Becker & Green PC in New York, which represented Corporate Transportation Group Ltd. and the other named defendants.

Under a multifactor “economic reality” test, the drivers are independent contractors because they set their own schedules, can affiliate with one franchiser or many, remain free to drive for competitors and can develop additional business on their own, the Second Circuit said April 12.

The court therefore affirmed dismissal of the drivers’ Fair Labor Standards Act claims against Corporate Transportation Group and the other franchisers that dispatch drivers mainly for corporate clients.

Breadth of Ruling Disputed

The case raises issues similar to those that drivers are pursuing against Uber Technologies Inc. and other ride-sharing companies. The Labor Department in August 2015 submitted an amicus brief supporting the drivers’ bid for employee status.

The decision’s potential impact isn’t confined to the transportation sector, Spelfogel told Bloomberg BNA April 12.

The Second Circuit “laid out a road map” that other companies can follow to ensure their workers are deemed independent contractors, he said.

But an attorney for the drivers said the court’s decision doesn’t have such a broad sweep.

“We’re disappointed in the outcome, which overlooks significant disputes between the parties about whether drivers are dependent on CTG for work, and are considering the options going forward,” said Michael J. Scimone of Outten & Golden LLP in New York, which represented the drivers.

The court “made very clear” its decision is “very particular” to the facts of these drivers’ cases, Scimone said in an email to Bloomberg BNA April 12.

The court said it’s possible for workers in similar arrangements to prove they are employees, Scimone said.

Drivers Called Business Owners

Under Second Circuit precedent, the appeals court said it considers five broad factors and the “totality of the circumstances” to decide if workers are “employees” of a company that pays for their services.

The factors include how the parties defined their relationship, the workers’ freedom to work other jobs in the same industry, the workers’ investment and economic returns, and schedule flexibility.

The “driver-owners” who “made significant decisions” about how to operate their own businesses can’t be considered employees owed minimum wages and overtime pay, the court decided.

The drivers “exercised their business acumen in choosing the manner and extent” of their affiliation with CTG and the other franchisers, Judge Debra Ann Livingston wrote in an opinion joined by Judges Pierre N. Leval and Susan L. Carney.

They worked for multiple black car services; cultivated their own clients apart from the franchisers; invested thousands of dollars in their cars, licenses and other business costs; and decided when, where and how regularly to work, the court said.

The drivers “owned or operated enterprises” that were “flexible and adaptable to market conditions,” the court said. “In short, based on the record here, ‘these driver-owners were small businesses.’”

Kahn Opton LLP also represented the drivers.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Labor & Employment on Bloomberg Law