The National Labor Relations Board’s (NLRB) Office of General Counsel (OGC) recently released a guidance memorandum in which it determined that drivers using the popular ride-sharing application, or App, Uber are not employees of the company. Instead, the memorandum clarifies that such drivers are independent contractors and underscores General Counsel Peter Robb’s approach to a long-debated employment issue particularly affecting the gig economy.
Over the past decade, the phenomenon of ride-sharing with companies such as Uber and Lyft has disrupted the personal transportation industry in a number of ways, and the use of ride-sharing Apps has become extremely popular with consumers. For drivers, Uber and Lyft provide flexibility and economic opportunity.
As one might expect, organized labor sees ride-share drivers as a target to organize in yet another effort to reverse a sixty year decline in union membership. The obstacle to that end, however, is the drivers’ status as independent contractors, who are explicitly excluded and thus cannot be unionized according to the National Labor Relations Act (NLRA).
Cue the Obama administration’s NLRB, which routinely delivered lopsided policies favoring organized labor. In 2016, the OGC issued an advice memo that reflected the sympathetic leanings of the Board’s majority. That memo declared that Postmates, an App that allows drivers to pick up and deliver orders for customers (similar to Uber and Lyft drivers’ role in providing rides to customers themselves), was the employer of those drivers.
The 30 page tome relied, in large part, on the NLRB’s decision in FedEx Home Delivery, in which the Board attempted to rewrite the common law definition of employment, essentially ignoring a 2009 decision by the D.C. Circuit that had laid out the court’s own interpretation.
Unsurprisingly, the D.C. Circuit did not side with the NLRB when the FedEx case made its way there, calling the Board’s determination "legally erroneous.” It then issued a judicial smack-down when the NLRB attempted to re-litigate the issue in a second case against the same employer, saying, “[i]t is as clear as clear can be that ‘the same issue presented in a later case in the same court should lead to the same result.’… Doubly so when the parties are the same.”
Because the NLRB refused to follow circuit court precedents under its theory of “nonacquiescence,” it continued to use its legally erroneous precedent, which made it necessary for the current Board to reestablish the status quo ante. It did just that in its SuperShuttle decision that overturned FedEx Home Delivery and “clarified the role entrepreneurial opportunity plays in its determination of independent-contractor status, as the D.C. Circuit has recognized.”
The recent OGC advice memo with regard to Uber evaluates the numerous factors for determining employment, noting that “the extent of company control—by minimally impacting economic and entrepreneurial opportunity—weighs in favor of independent-contractor status for” Uber drivers.
More importantly, the memo indicates that General Counsel Peter Robb will take a more circumspect approach to similar cases involving independent contractors. That approach will allow App-based companies to continue to deliver economic opportunities for entrepreneurs and leave them free from needless government meddling.