The Seventh Circuit recently affirmed the district court’s decision in Callahan v. City of Chicago, 75 F. Supp. 3d 791 (N.D. Ill. 2015). Callahan, a taxi driver in Chicago, brought suit in district court against the city, pursuant to the Fair Labor Standards Act (FLSA), arguing that the city’s extensive regulations of the taxi industry made her a de facto employee of the city, and that as its employee, the city was required to pay her minimum wage.

The district court granted the city’s motion for summary judgment after an extensive analysis of the city’s control over the taxi industry—and ultimately this particular plaintiff’s manner of work—under the economic realities test. The Seventh Circuit three-judge panel did not require as much in affirming the dismissal of Callahan’s FLSA claims. By focusing on the bigger picture, the Seventh Circuit panel highlighted the endless and unintended consequences that a finding of employee status would have. The policy implications ultimately weighed heavily in favor of the city, regardless of whether taxi drivers were vital to the city, or that the city’s regulations amounted to significant control over taxi drivers’ work.

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