The Third US Circuit Court of Appeals yesterday revived a lawsuit in which UberBLACK drivers in Philadelphia allege that human cloud, ride-sharing firm Uber Technologies Inc. misclassified them as independent contractors. A federal district court in 2018 incorrectly determined the drivers were not employees as a matter of law, the appeals court held, reversing summary judgment for Uber, Bloomberg Law reported.

While UberBLACK drivers set their own schedules and have some ability to select passengers, a judge or jury must determine if Uber still maintains the right to control several aspects of their work and their opportunities for profit, the appeals court said, reversing the Eastern District of Pennsylvania’s summary judgment in Uber’s favor. A company’s control over a worker is a major factor in determining whether an employee or contractor relationship exists.

The decision only applies to UberBLACK drivers in Pennsylvania and only has precedential value in the circuit, which includes New Jersey and Delaware. But legal observers say the case could have broad impact, as it may test the fundamental framework of the rideshare company’s workforce model.

Nationally, this is the first court of appeals case involving Uber — or any gig economy company — to address misclassification under the Fair Labor Standards Act  standard, said Travis Lenkner of Keller Lenkner LLC, a firm that represented the UberBLACK drivers on appeal in the proposed class action. In previous disputes that rose to the appeals court, drivers ultimately were compelled to arbitration.

“This is a win not only for our clients, but for Uber drivers and gig-economy workers throughout the country,” Lenkner said in an email to Bloomberg Law. “If Uber couldn’t defend summary judgment for these UberBLACK drivers, it is difficult to imagine how Uber and other gig companies can avoid trial on any of their workers’ misclassification claims.”

Uber disagrees with the Third Circuit’s opinion and is considering “all options,” an Uber spokesperson said in a statement. “The Third Circuit did not rule that drivers using UberBLACK in Philadelphia should be classified as employees; it merely found that there were fact issues that could not be decided in a summary judgment motion.”

The case is Razak, et al. v. Uber Technologies.