Recent Appellate Division Decision Could Affect Uber Drivers Ability to File Workers' Compensation Claims

The Superior Court of New Jersey Appellate Division issued an opinion in Babekr v. XYZ Two Way Radio that could affect whether drivers, such as Uber drivers, are considered employees under the New Jersey Workers’ Compensation Act (the Act).

The petitioner, a limousine driver for XYZ Two Way Radio (XYZ) for 23 years, was involved in a motor vehicle accident while transporting passengers.  The driver used his own vehicle and he paid for the automobile insurance for the vehicle while acting as a driver for XYZ.  The Workers’ Compensation Judge ruled the petitioner was not an employee of XYZ when he was involved in the accident and as such did not have a compensable injury under the Act.  The Appellate Division affirmed the decision finding sufficient credible evidence was produced in the record to support the driver was not an employee.

At issue in Babekr was whether the petitioner was an employee or an independent contractor.  Under the Act, only employees are entitled to workers’ compensation benefits for injuries arising out of and in the course of employment.  If an individual is deemed to be an independent contractor, he or she is not entitled to any benefits under the Act.

In determining whether the driver was an employee or an independent contractor, the Court looked to the 12 factors established in Estate of Kotsovska v. Liebman in conjunction with whether the petitioner was economically dependent on the work relationship.

The factors are the employer’s right to control the means and manner of the worker’s performance; the kind of occupation (supervised or unsupervised); skill; who furnished the equipment and workplace; the length of time in which the individual has worked; the method of payment; the manner of termination of the work relationship; whether there is annual leave; whether the work is an integral part of the business of the employer; whether the worker accrues retirement benefits; whether the employer pays social security taxes; and the intention of the parties.

In this case, the Court weighted all of the factors, but focused more on factors one and nine.

Factor One:  The employer’s right to control the means and manner of the worker’s performance. This factor is given less weight when the particular job does not require the hiring party to supervise.  Here, the driver was required to have a certain type of car in which to transport passengers, dress a certain way and log onto a car computer supplied by XYZ to be provided with passengers.  This was not enough control as the driver could choose when to log onto the computer and he made his own schedule of working 10 to 12 hours per day six days per week.  Additionally, XYZ merely used the computer to communicate with the driver about passenger pick-ups. 

Factor Nine:  Whether the work is an integral part of the business of the employer.  Consideration of this factor was done in conjunction with whether the petitioner was economically dependent on the work relationship. In determining whether the worker was economically dependent on the employer, a court considers whether the worker, acting as a subcontractor, does essentially the same work was the employer’s regular employees.  Here, the driver transported passengers, an integral part of XYZ’s business as a car limousine service.  However, each driver was co-owner of XYZ as they received a percentage of the fare for each passenger transported.  Additionally, XYZ as a business was never dependent on one driver to transport passengers as drivers were waiting in line for a chance to transport passengers.

This case, although unpublished, can have an effect on workers’ compensation claims filed by Uber drivers.  The company emphasizes the independence and flexibility drivers have in working as often as they want and when they want.  As such, Uber classifies drivers as independent contractors and not employees. 

If an Uber driver is injured while acting as a driver in New Jersey, a judge of compensation would have to weigh the 12 factors of Kotsovska and whether the driver is economically dependent on the relationship.  Depending on the weight given to each factor, a judge could find Uber drivers are independent contractors as displayed through Uber’s website and thus not entitled to workers’ compensation benefits.

For more information, please contact Jeffrey D. Newby at jnewby@wglaw.com or 856.667.5804 or Vanessa Mendelewski at vmendelewski@wglaw.com or 973.854.1061.