First federal ruling on the gig economy

Uber drivers are independent contractors, not full-time employees of the ride-hailing company, a federal judge ruled in what is said to be the first classification of Uber drivers under federal law.

Reuters reported that US District Judge Michael Baylson said on Wednesday that Uber does not exert enough control over drivers for its limo service, Uber Black, to be considered their employer under the federal Fair Labor Standards Act. The drivers work when they want to and are free to do what they want in between rides, Baylson said.

A spokesperson for Uber said the company is “pleased” with the judge’s ruling, while a lawyer for the plaintiffs said he would appeal the ruling.

Uber classifies its drivers as independent contractors, arguing they are in business for themselves and thus ineligible for traditional benefits like overtime, minimum wage protections, and health insurance. Some Uber drivers contest that classification, though, and argue that Uber’s algorithm exerts far too much control over their lives to be viewed otherwise. Many have sued Uber, but most of those cases have been sent to private arbitration.

In 2016, Uber agreed to settle two class action lawsuits challenging driver classification for as much as $100 million. A federal judge later rejected the settlement, saying it was neither fair nor adequate. That case continues to lumber its way through the courts.

Earlier this year, a federal judge in California ruled drivers for GrubHub are independent contractors, not employees. The ruling was seen as a big win for GrubHub due to California’s relatively high standard for establishing workers as independent contractors.