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UBER Style Business Found To Be Employer of Driver

By on October 31, 2018 in Other with 0 Comments

Julio Pendola fractured his ankle in 2014 picking up a customer and filed a petition in the Division of Workers’ Compensation.  He asserted that he worked exclusively as a driver for Classic, which had over 100 cars.  He purchased his own car after consulting with Classic.  The company required Pendola to paint the car silver and affix the Classic logo to the sides and front of the car with the company’s phone number.  Classic also required Pendola to purchase a two-way radio for installation in the car.  Eventually they changed to computer tablets to dispatch drivers.  All of these expenses were paid for by Pendola along with the medallion, gas, maintenance on his car and liability insurance.

Classic dispatched all the passengers which Pendola picked up.  He could not pick up passengers off the street like a taxi driver.  Pendola paid Classic $150 per week and then kept his fares, grossing between $500 to $700 per week.  Pendola could work when he wanted to work. He had to keep the car clean and dress appropriately.  Otherwise he would be suspended.

Testimony at trial revealed that Classic considered itself to be merely a dispatching service and that drivers were considered independent contractors.  The color of the cars was an article of compliance with the City of Newark Taxi Division.  The company would check on the cleanness of cars that were being used.  The company also furnished drivers with business cards, receipts, vouchers for credit cards, and sometimes key chains and pens.  The company did not issue a 1099 or W-2 because the company considered drivers not to be employees.  The drivers simply would keep their fares.

The Judge of Compensation ruled in favor of Classic and found that Pendola was an independent contractor.  The judge noted that Pendola was free to accept or reject fares and was not supervised by anyone.  In regard to whether Pendola’s work was an integral part of Classic’s business, the Judge of Compensation found that Classic was not dependent on Pendola.  No one driver was essential to the business.

On appeal the Appellate Division observed that drivers were not free to pick up any nearby passenger.  They had to request the ride from the dispatcher, who would then decide which driver would get the assignment.  The Court thought it significant that the company would evaluate the condition of cars.  The Court disagreed on the analysis of the functional relationship between Pendola and Classic.  “It cannot be seriously disputed that Pendola was one of the ‘cogs’ in Classic’s operation.  His work as a driver willing to provide the rides Classic arranged was essential to the success of its business.”

The Appellate Division viewed Classic as more than a dispatching company but instead viewed it as a transportation company.  The Court noted that it had found Classic to be an employer in a prior case along the same lines in 1999.  It saw no reason to vary from that prior decision and reversed in favor of Pendola.

The case can be found at Pendola v. Milenio Express, Inc., d/b/a/ Classic, A-0225-17T2 (App. Div. October 26, 2018).  It shows how New Jersey courts will likely consider drivers for companies like Lyft and Uber when such cases find their way to the Appellate level.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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