Saleem v. Corporate Transportation Group, Ltd.

Brief Fact Summary.

Plaintiffs are drivers and franchisees of black-car services owned and franchised out by the defendants. Plaintiffs have a good deal of autonomy over their work in nearly every aspect. Plaintiffs are asserting that defendants owe them unpaid overtime.

Synopsis of Rule of Law.

Determining whether an individual is an employee or an independent contractor requires analyzing the economic realities of the work situation. A high degree of autonomy indicates that one is an independent contractor.

Facts.

The plaintiffs are black-car drivers and franchise owners in the tri-state area affiliated with the defendant franchisors. About 700 cars were associate with the defendants’ dispatch bases. The plaintiffs for the most part rented or purchased franchises directly from the defendants. Renting cost $130-$150 per week, and buying came with fees as high as $60,000. Franchisees were also required to obtain licenses from the New York City Taxi & Limousine Commission (TLC). The franchise agreements contained language that stated that franchisees were not considered employees of the defendant franchisors. The agreements also contained a non-compete provision that disallowed franchisors from transporting passengers without processing payment through defendants. The plaintiff franchisees also had to conform to a dress code and other rules of conduct from the defendants. The plaintiffs had a considerable amount of freedom to run their own cars and work certain hours as they saw fit. Plaintiffs took home up to 85% of their fares, so plaintiffs classified themselves as independent contractors on tax returns, taking substantial business deductions.

Issue.

Are the plaintiff drivers/franchisees owed unpaid overtime under FLSA and NYLL?

Held.

No. The plaintiffs are independent contractors, not employees. Summary judgement was properly granted by the district court.

Discussion.

Under FLSA, employees are individuals employed by an employer. In cases determining the difference between independent contractors and employees, the analysis comes down to the economic reality of the relationship. Here, the plaintiffs are independent contractors because of the degree of autonomy they enjoy in their day-to-day work. The plaintiffs notably had entrepreneurial opportunities outside their contracts with the defendants, and they had significant flexibility in their schedules—not only were they allowed to set their own schedules, they actually did so. Based on the record provided, the plaintiffs were small businessmen, not employees. It is not irrelevant that defendants provided the plaintiffs’ client base, but that fact is outweighed by the economic realities presented in the other details.