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A US judge in Philadelphia has ruled that limousine drivers for Uber Technologies Inc. are independent contractors and not the company's employees under federal law, the first ruling of its kind on a crucial issue for the ride-hailing company.

A federal judge on the United States District Court for the Eastern District of Pennsylvania [official website] on Thursday has found [opinion, PDF] that Uber limousine drivers are independent contractors and not employees for the purposes of the Fair Labor Standards Act (FLSA) [materials] and similar Pennsylvania state laws.

Reuters reports that Judge Baylson argued that Uber drivers get their own perks by choosing their hours, and being free to nap, run errands or have unlimited cigarette breaks.

The legal classification of workers has been a major issue for "gig economy" companies that rely on independent contractors.

"Given the unique business model which transportation network companies, such as Uber, have created, and their applicability to UberBLACK drivers, the fact that Uber does exercise some control when UberBLACK drivers are online does not convert UberBLACK drivers into employees", Baylson said.

According to a report from Bloomberg, one of the plaintiffs' lawyers, Jeremy Abay, said he would appeal the ruling to the Third U.S. Circuit Court of Appeals, in Philadelphia. Uber has always maintained its drivers work on the their own time and qualify as independent contractors, or freelancers.

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In a statement given to this news organization, Uber said it was pleased with Judge Baylson's decision.

Numerous cases filed against Uber have been sent to arbitration, but the plaintiffs in the Philadelphia case were among a small minority of drivers who had opted not to sign arbitration agreements with the company.

Uber reportedly learned of the breach in 2016, but the public was not notified until a year later. But state agencies in California and NY have said that they are under those states' laws.

The news could have significant ramifications for the rest of the so-called "gig economy" which have been subject to a number of test cases as this new style of working emerges.

The Philadelphia lawsuit was filed in February 2016.

"Uber places no restrictions on drivers' ability to engage in personal activities while online, and plaintiffs here, in fact, engaged in a range of personal activities while online", Baylson said.

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