testbench: Factories not working correctly, results in call to a member function define on null error.

Using factories does not work as intended in tests. Trying to call a factory results in the following error: Fatal error: Uncaught Error: Call to a member function define() on null

This is for orchestra v3.8

These are the TestCase, Test and factory files being used.

namespace Tests;

use Orchestra\Testbench\Concerns\WithFactories;
use Orchestra\Testbench\TestCase as BaseTestCase;

class TestCase extends BaseTestCase
{
    use WithFactories;

    protected function setUp(): void
    {
        parent::setUp();

        $this->withFactories(__DIR__.'/../src/database/factories');
    }

    protected function getPackageProviders($app): array
    {
        return [
            // providers
        ];
    }

    protected function getPackageAliases($app)
    {
        return [
            // aliases
        ];
    }
}

namespace Tests\Feature;

use App\User;
use Tests\TestCase;
use Illuminate\Foundation\Testing\WithFaker;

class UserTest extends TestCase
{
    use WithFaker;

    private $user;

    public function setUp(): void
    {
        parent::setUp();

        $this->artisan('migrate');

        $this->user = factory(User::class)->create();
    }
}

/** @var \Illuminate\Database\Eloquent\Factory $factory */
use App\User;
use Illuminate\Support\Str;
use Faker\Generator as Faker;

$factory->define(User::class, function (Faker $faker) {
    return [
        'first_name' => $faker->firstName,
        'last_name' => $faker->lastName,
        'email' => $faker->unique()->safeEmail,
        'email_verified_at' => now(),
        'password' => '', // password
        'remember_token' => Str::random(10),
    ];
});

Can you tell me what could possibly be wrong here? Is this an implementation error or a bug in orchestra itself?