DENVER — A U.S. appellate court has affirmed that a group of drivers who leased their trucks from Pathway Leasing are independent contractors and not employees.
The 10th U.S. Circuit Court of Appeals upheld the ruling of a lower court, which found that the “economic realities” test determined that lessees of Denver-based Pathway leasing were independent contractors under the Fair Labor Standards Act.
All 15 plaintiffs in the case were drivers that leased their trucks via Pathway and drove for XPO Logistics.
What the court found on the six prongs of the economic realities test is as follows:
- Degree of control the employer exerts over the worker. The lower court found that drivers under the lease were not required to drive a load if ordered to do so by XPO.
- The worker’s opportunity to profit from his or her activities, or the exposure to loss. The lower court found that drivers could create addition profit for themselves by better fuel efficiency, route optimization and completing the lease-to-own agreement.
- Worker investment in the business. The lower court found lease payments themselves constituted investments in their business.
- The degree of permanence in the relationship between worker and employer.
- The degree of skill needed to perform the work.
- The extent to which the work is an “integral part” of what the employer does. The lower court was “neutral” on this. The court found that the XPO-Pathways relationship was one of a “joint employer,” but it also found that status was not enough to change its findings on the economic realities test.
“Even assuming the ‘integral to the business’ factor is not neutral, but favors employee status when joint employment is assumed, we will not reverse the district court’s ultimate classification decision unless it fails to withstand scrutiny under de novo review. Here, we discern no reversible error,” the court’s decision said.
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