NLRB Finds Uber Drivers Are Independent Contractors, Not Employees
Author: David B. Weisenfeld, XpertHR Legal Editor
May 17, 2019
The National Labor Relations Board (NLRB) has concluded that Uber drivers are independent contractors, not employees. In an April advice memo just released this week, the NLRB handed Uber a big victory and left its drivers without the right to organize under the National Labor Relations Act.
Writing for the NLRB, Associate General Counsel Jayme L. Sophir said, "The drivers had significant entrepreneurial opportunity by virtue of their near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber."
She added that on any given day, drivers could decide how best to serve their economic interests, whether by fulfilling ride requests through the Uber app or by doing something different altogether. These facts, Sophir explained, strongly support independent contractor status and outweigh any considerations supporting employee status.
The NLRB advice memo comes on the heels of a US Department of Labor opinion letter that service providers for a gig economy company are independent contractors, not employees, under the Fair Labor Standards Act (FLSA). The DOL said the facts described by the gig company requesting its opinion letter showed that the company:
- Gave the service providers flexibility to choose their work hours;
- Did not restrict them from working for competitors; and
- Did not invest in their service providers equipment or facilities.
Many Uber and Lyft drivers have complained of being underpaid. But according to a recent New York Times story, some industry estimates have stated that the companies' labor costs could rise 20 to 30 percent if they were forced to treat drivers as employees.
Despite the NLRB memo, states remain free to go beyond the federal FLSA. For instance, the California Supreme Court's 2018 Dynamex ruling established a much more employee-friendly test by making it more difficult for companies to classify workers as independent contractors rather than employees.