Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: July 5, 2019
The Firm
201-896-4100 info@sh-law.comThe National Labor Relations Board (NLRB or Board) is the latest to weigh in on whether gig economy workers are independent contractors or employees. The NLRB recently published an advice memorandum concluding that UberX and UberBlack drivers are independent contractors. Accordingly, they are not covered under the National Labor Relations Act (NLRA) and may not form a union for the purposes of collective bargaining and filing unfair labor practices charges.
The NLRA grants employees the right to form or join unions; engage in protected, concerted activities to address or improve working conditions; or refrain from engaging in these activities. Section 7 specifically guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”
Most employees in the private sector are covered under the NLRA. However, the NLRA’s definition of “employee” expressly excludes “any individual having the status of an independent contractor.”
In its advice memorandum, the NLRB’s General Counsel concluded that UberX and UberBLACK drivers are independent contractors. In reaching its decision, the NLRB applied the ten nonexhaustive common-law factors enumerated in the Restatement (Second) of Agency:
As set forth in its memorandum, the Board gave significant weight to two factors: (1) the extent of the company’s control over the manner and means by which drivers conduct business and (2) the relationship between the company’s compensation and the amount of fares collected. It also relied heavily on its decision in SuperShuttle DFW, Inc., in which the Board altered its factors for the independent contractor inquiry to place greater emphasis on “entrepreneurial opportunities” rather “economic realities.”
“Drivers’ virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity. On any given day, at any free moment, UberX drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing ride-share service, or pursuing a different venture altogether,” the memorandum stated. “The surge pricing and other financial incentives Uber utilized to meet rider demand not only reflect Uber’s “hands-off” approach, they also constituted a further entrepreneurial opportunity for drivers. Although Uber limited drivers’ selection of trips, established fares, and exercised less significant forms of control, overall UberX drivers operated with a level of entrepreneurial freedom consistent with independent-contractor status. “
The Board’s General Counsel further concluded that the drivers’ lack of supervision, significant capital investments in their work, and their understanding that they were independent contractors also weigh heavily in favor of that status. It also downplayed the importance of factors that suggested employee status. “Although Uber retained portions of drivers’ fares under a commission-based system that may usually support employee status, that factor is neutral here because Uber’s business model avoids the control of drivers traditionally associated with such systems and affords drivers significant entrepreneurial opportunity,” the memo stated. “The other factors supporting employee status—the skill required and our assumption that drivers operated as part of Uber’s regular business, and not in a distinct business or occupation—are also of lesser importance in this factual context. Accordingly, we conclude that UberX drivers were independent contractors.”
Given its conclusion, the NLRB’s General Counsel advised that it will not prosecute unfair labor practices under the NLRA on behalf of Uber workers. It directed the Board’s regional offices to dismiss all pending charges, absent withdrawal.
The NLRB’s memo is good news for Uber and other gig economy businesses because it concludes that workers are not entitled to unionize and benefit from the other protections of the NLRA. Nonetheless, it is also important to recognize that other federal agencies, such as the IRS, have their own guidelines to determine who is and isn’t an independent contractor. In addition, many states, including New Jersey, have their own independent contractor tests as well. To avoid facing liability for misclassification or other employment issues, it is imperative to consult with experienced counsel.
If you have any questions or if you would like to discuss the matter further, please contact me, Liana M. Nobile, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!