• Related Professionals -

eLABORate: In a Boost to the Gig-Economy, NLRB Says Uber Drivers are Not Employees

May 22, 2019

The National Labor Relations Board (NLRB) has released an advisory opinion concluding that Uber drivers are independent contractors, restricting those drivers’ right to unionize, file labor complaints, or seek protections from the federal government.

The opinion was issued by Jayme Sophir, associate general counsel of the Division of Advice in the NLRB Office of the General Counsel. The decision comes after Uber entered into a settlement worth at least $100 million with drivers to settle their misclassification claims in advance of its disappointing IPO earlier this month.

The NLRB applied a common-law agency test, examining ten non-exhaustive factors, giving particular weight to the factors of (1) control, and (2) the relationship between the company’s compensation and the amount of fares collected. As to Uber, the NLRB explained:

Drivers’ [exercise] virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity. On any given day, at any free moment, UberX drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing rideshare service, or pursuing a different venture altogether.

Other agencies and courts have recently agreed – the Department of Labor issued an opinion letter last month stating that service providers working for a “virtual marketplace company” are ineligible for minimum wages, overtime pay, and tax deductions due to their status as independent contractors, and a federal district court judge held in Uber’s favor last year in a misclassification lawsuit.

The NRLB advisory opinion is a certain win for gig-economy companies whose business models would struggle to withstand the pressure (and cost) of increased regulation, but the rulings on this issue have not been uniform. State and local governments across the United States, as well as abroad, have reached a different result, requiring Uber and other gig-economy companies to treat their workers as employees. This dynamic landscape leads to uncertainty, and as we’ve seen in other areas where the Trump Administration has issued industry favorable opinions, has resulted in a sharp increase the variation amongst state and local government regulations, inadvertently leaving behind a minefield for multijurisdictional companies to navigate.