NLRB General Counsel’s Office Says Uber Drivers are Independent Contractors
Uber drivers are “independent contractors” and not “employees” under the National Labor Relations Act (“NLRA”), according to an Advice Memorandum issued on May 14, 2019, by the Office of the General Counsel (“OGC”) of the National Labor Relations Board (“NLRB”). Acknowledging the virtually unfettered control Uber drivers’ have over their cars, work schedules, and log-in locations, as well as their freedom to work for Uber’s competitors, the OGC determined that such autonomy provides the drivers with significant entrepreneurial opportunity, making them independent contractors.
Three separate unfair labor practice charges had been filed with the NLRB by UberX and UberBLACK drivers, alleging that Uber violated the drivers’ rights under the National Labor Relations Act (“NLRA”). The NLRA grants employees the right to engage in protected concerted activity, including, for example, organizing and joining a union and other actions concerning employees’ wages, hours, and working conditions. Independent contractors do not have any rights under the NLRA. The cases were submitted for advice on whether Uber drivers are employees or independent contractors under the NLRA.
In reaching its determination, the OGC applied the 10-factor common law agency test enunciated by the NLRB in its SuperShuttle decision released earlier this year. 367 NLRB No. 75, slip op. at 1. A discussion of the SuperShuttle decision can be found, here. These factors include: (1) the degree of the employer’s control; (2) the involvement of a distinct occupation or business; (3) whether this type of work in the locality is usually done under the direction of an employer; (4) the skill required for the work; (5) the worker’s investment in equipment; (6) the permanency of the relationship; (7) the method of payment; (8) the integration of the worker’s services into the employer’s business; (9) the understanding of the parties regarding the nature of the relationship; and (10) whether the principal is a business. The OGC viewed these factors through the “prism of entrepreneurial opportunity.”
The OGC found that Uber drivers have near complete control of their cars and work schedules, have freedom to choose log-in locations, and freedom to work for Uber’s competitors. Uber places no limits on the drivers’ autonomy, and even amplifies the drivers’ entrepreneurial opportunity through variable fare pricing and promotions. Other factors supporting Uber’s lack of control include the fact that the drivers provide the principal instrumentality for the work (their car) and are responsible for operating expenses such as gas, cleaning and maintenance for the vehicle. Uber drivers, moreover, do not report to a supervisor. The Memorandum further noted that in self-assessments, both Uber and the drivers stated that they understood their relationship to be one of independent contractors.
Although several common law factors pointed toward finding employee status, such as no special skills or experience are required, the drivers’ services are integral to Uber’s business, and drivers are paid a percentage of fares rather than a flat rate, the OGC did not find these factors to be dispositive. Rather, the OGC concluded that, overall, UberX and UberBLACK drivers operate with a level of entrepreneurial freedom consistent with being independent contractors.
Based on its determination, the OGC directed that the pending unfair labor practice charges be dismissed.
The OGC’s determination is significant but is limited to independent contractor v. employee analysis under the NLRA only. Notably, earlier this month, the United States Department of Labor Wage and Hour Division (WHD) similarly concluded that gig economy workers are independent contractors rather than employees under the Fair Labor Standards Act (“FLSA”). As discussed in our blog on this development, the WHD used an analysis similar to the NLRB’s in SuperShuttle, focusing on the worker’s entrepreneurial independence.
These opinions reveal the current administration’s reluctance to find “employee” status in gig economy relationships. Businesses, nevertheless, are cautioned not to assume that its workers will be classified as independent contractors based on the analysis enunciated by the NLRB and WHD. Critically, other federal and state laws apply different standards and factors. Therefore, it is important to ascertain and fully understand the applicable standard in determining “independent contractor” v. “employee” status under the various federal and state laws to which a company is subject before making worker classification decisions.