UBER Update: NLRB Advice Memo Reaffirms the “Entrepreneurial Opportunity” Test for Independent Contractors

June 5, 2019 | By Ivo J. Becica

The “gig economy” has prompted a nationwide debate about which workers should be deemed employees (and therefore entitled to certain rights and benefits under labor and employment laws) as opposed to independent contractors.  As previously covered by HR Legalist, the ride-sharing service Uber has found itself at the center of some prior skirmishes in this battle, and has scored a few recent victories.  On April 16, 2019, the National Labor Relations Board (“NLRB”) Office of the General Counsel, Division of Advice released an Advice Memorandum, calling for dismissal of five unfair labor practice charges filed by UberX and Uber-Black drivers because they are independent contractors—and therefore not protected under the National Labor Relations Act (“NLRA”).

The memo relies heavily on the Board’s January 25, 2019 decision in SuperShuttle DFW (discussed in a previous HR Legalist blog post), which focused on the degree of entrepreneurial opportunity afforded to workers as the driving force in determining independent contractor status.

Applying the Board’s entrepreneurial opportunity analysis in SuperShuttle, the Division of Advice found that Uber’s drivers are independent contractors, and dismissed their unfair labor practice charges for lack of standing. The Division of Advice found that Uber afforded its drivers significantly more entrepreneurial freedom than SuperShuttle’s drivers, thus overcoming any presumption that they were employees. Specifically, the Division of Advice noted that Uber drivers maintain virtually complete control over their vehicles, work schedules, and log-in locations. The memo also emphasized an Uber driver’s ability to simultaneously accept riders using Uber’s main competitor, Lyft.  While Uber retains a portion of its drivers’ fares under a commission-based system, which usually supports employee status, that factor was considered neutral because Uber’s business model simply does not maintain the level of control over drivers indicative of a traditional employer/employee relationship.

This memorandum will likely have an impact on the ability of gig-economy workers to organize or seek relief under the NLRA. It also further solidifies the SuperShuttle decision, as the NLRB Office of General Counsel will likely not pursue unfair labor practice charges of workers similarly situated to Uber’s drivers moving forward under the current Presidential Administration.

It is important to keep in mind that many other federal and state laws may not apply the same analysis as the NLRB to determine independent contractor status. Employers seeking guidance on the implications of their current designation of employees under state and/or federal law should contact one of Obermayer’s knowledgeable labor and employment attorneys.

About the Authors

Ivo Becica

Ivo J. Becica

Associate

Ivo is a senior associate in Obermayer’s Labor Relations & Employment Law Department. He focuses his practice on representing employers, including advising companies on how to handle employee issues, and defending employee...

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