Last week, the General Counsel of the National Labor Relations Board publicly released an Advice Memorandum saying that Uber drivers are not “employees” with protections under the National Labor Relations Act.

The memorandum, issued on April 16, indicates possibly tougher times for all workers in the gig economy.

The General Counsel concluded that Uber drivers operating under the arrangements in place during most of 2015 and part of 2016 were independent contractors, not employees, which means that they had no rights under the NLRA.

The General Counsel applied the standard set forth in the Board’s recent SuperShuttle DFW decision. In determining whether a worker is an independent contractor or an employee for NLRA purposes, the key question is the “entrepreneurial opportunity” that the worker has. In making that determination, the Board looks at 10 factors:

•   The control that the entity exercises over the details of the work.
•   Whether the worker “is engaged in a distinct occupation or business.”
•   The type of occupation, including whether the work is normally supervised or performed without supervision.
•   The skill required.
•   Whether the entity or the worker provides tools, equipment, and a worksite.
•   “The length of time for which the person is employed.”
•   Whether the worker is paid by time, or by the job.
•   Whether the work is part of the entity’s regular business.
•   Whether the worker and entity believe they are creating an employment relationship.
•   Whether the worker is in business.

The General Counsel determined that the Uber drivers had “near complete control of their cars and work schedules,” as well as the ability to log in to the Uber app (to be able to accept ride requests) at their discretion. They were also permitted to work for competitors of Uber and could even switch to a competitor’s app while en route with a passenger. They could set their own schedules as long as they accepted at least one ride per month.

Another factor that weighed in favor of the “independent contractor” finding was that the drivers indemnified Uber for liability based on the drivers’ conduct, and Uber was not responsible for riders’ conduct. According to the General Counsel, “[t]hese contractual provisions greatly lessened Uber’s motivation to control drivers’ actions, since Uber was not liable for drivers’ or riders’ negligent or intentionally harmful acts.”

Although Uber had in place various “quality control” and customer satisfaction metrics, the General Counsel found that they were “too general” and did not affect the drivers’ entrepreneurial opportunities.

The method of payment — taking a percentage of the fare received by the driver — was, at worst, “neutral” for Uber. It did indicate that drivers were paid “by the job” rather than for their time, and the drivers retained their freedom to drive for Uber, drive for an Uber competitor, or not drive (or work) at all.

Regarding equipment, the drivers supplied their own vehicles, and paid for their own gas and maintenance. In addition, they were not supervised by Uber. Their contracts expressly said that they were independent contractors, and not employees.

Advice Memoranda provide direction to the NLRB’s Regional Offices about whether to issue complaints based on unfair labor practice charges, or whether to dismiss the charges. Memoranda that recommend dismissal must be released immediately. Memoranda that recommend issuance of a complaint can be released at the General Counsel’s discretion but only after the cases have concluded.

The Uber Advice Memorandum applies to the NLRA only. State laws, and even other federal laws, may have different standards in determining whether a worker is an independent contractor or an employee.

May 21, 2019/by Labor