Earlier this month, in Saleem v. Corporate Transportation Group, Ltd., the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s ruling that “black car” drivers in the tri-state area were properly classified as independent contractors, and thus not entitled to overtime pay under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL).
Black car drivers provide luxury transportation services to clients who prearrange for rides. In 2012, a group of black car drivers operating in New York, New Jersey, and Pennsylvania filed suit against their employer, Corporate Transportation Group, Ltd. (“CTG”), alleging that it had misclassified them as independent contractors, and as a result failed to pay them overtime. Under the FLSA and NYLL, employees—but not independent contractors—must be paid time-and-a-half for hours worked over 40 in one week.
CTG owned a license that allowed it to run a black car dispatch, and the drivers rented or purchased franchises from CTG. A franchise gave the drivers access to CTG’s central dispatch service, which connected the drivers with customers. The drivers entered into agreements with CTG stating that they were not employees and were not subject to the company’s control or direction, and the drivers were allowed to provide transportation services to other clients or companies while also serving CTG customers. The drivers were required to follow certain company policies, including vehicle condition and dress code.
The District Court granted summary judgment in favor of CTG, holding that the black car drivers were independent contractors, and thus not entitled to overtime pay. The black car drivers appealed to the Second Circuit, and on April 12, the Second Circuit affirmed.
In its decision, the Second Circuit applied the economic realities test and found that “despite the broad sweep of the FLSA’s definition of “employee,”” the drivers were small business owners working for themselves, not employees of CTG. The Court found four facts most persuasive in coming to its conclusion: “Plaintiffs independently determined (1) the manner and extent of their affiliation with CTG; (2) whether to work exclusively for CTG’s 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’s clients.” Saleem, 2017 U.S. App. LEXIS 6305 *, *13-*14.
While the court in this case found that the drivers were independent contractors, the analysis varies from case to case. If you believe you are not receiving overtime pay because your employer has misclassified you as an independent contractor, contact this office for a free consultation.