NLRB: Uber Drivers Are Independent Contractors

The NLRB’s determination could prevent Uber drivers and similarly situated workers in other industries from asserting rights under the National Labor Relations Act.

Pursuant to an April 16, 2019, memo, the National Labor Relations Board (NLRB) general counsel’s office has determined that Uber drivers are independent contractors, not employees.

The NLRB’s lead attorney’s conclusion is based on the “common-law agency test,” which requires the application of 10 non-exhaustive common-law factors:

1. The extent of control which, by the agreement, the master may exercise over the details of the work.
2. Whether or not the one employed is engaged in a distinct occupation or business.
3. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
4. The skill required in the particular occupation.
5. Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
6. The length of time for which the person is employed.
7. The method of payment, whether by the time or by the job.
8. Whether or not the work is part of the regular business of the employer.
9. Whether or not the parties believe they are creating the relation of master and servant.
10. Whether the principal is or is not in business.[1]

For now, the memorandum does not appear to be far reaching, as it is likely confined to employment rights protected by the National Labor Relations Act (NLRA).

Employers should keep in mind that employment rights are essentially a bundle of independent sticks that come from a variety of different sources, rather than one giant “take it or leave it” package. These sources include federal legislation, such as the Fair Labor Standards Act (governing overtime and minimum wage), Title VII (governing anti-discrimination workplace measures), and other federal statutes such as the NLRA.

The immediate impact of the NLRB memorandum is likely to interfere with Uber drivers – and employees similarly situated in other industries – in asserting NLRA rights. The NLRA provides employees covered under the Act with the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively … and to engage in other concerted activities.” Independent contractors are not covered by the NLRA and therefore are not afforded these same protections.

Employers should also keep in mind that there are a number of state-specific employee protection laws. For example, the California Labor Commission determined in 2015 that Uber drivers in California were employees, not independent contractors, thereby placing them under the protection of California employment laws.

In September 2019, the California Assembly passed Assembly Bill 5 to codify the Labor Commissioner’s determination that Uber drivers – and similar “gig workers” – are employees. The bill imposes a three-factor test that differs from the NLRB test listed above.

Arizona typically follows the federal scheme in most regards; however, there are state-specific Arizona laws with which Arizona employers must continue to comply.

The correct classification of workers is important both for workers and employers alike. Incorrectly classifying workers may lead to liability under a number of state and federal statutes.

¹Factors taken from Supershuttle, 367 NLRB No. 75 slip op. at 1 (citing BKN, Inc., NLRB 143, 144 (2001).