NLRB General Counsel Concludes That Drivers Using the Uber App Are Independent Contractors, Not Employees

The Division of Advice of the National Labor Relations Board (“NLRB” or “Board”), in an Advice Memorandum, dated April 16, 2019 (“Advice Memo”),[1] has concluded that “drivers providing personal transportation services” using Uber Technologies Inc.’s “app-based ride-share platforms” were independent contractors and not employees, as the drivers had alleged in a series of unfair labor practice charges filed in 2014, 2015, and 2016. Based on the Division of Advice’s analysis of the relationship between Uber and the drivers, the General Counsel’s office directed that the Regional Directors in San Francisco, Chicago, and Brooklyn dismiss the charges.

Other Recent Developments 

Given recent pronouncements from the NLRB in decisions such as SuperShuttle DFW, Inc. (367 NLRB N0. 75, January 25, 2019), and the recently released U.S. Department of Labor (“DOL”) Opinion Letter, in which the Board and the DOL have found similar types of gig-economy workers to be independent contractors and not employees, the Advice Memo should not come as a surprise to those who follow developments in this area. In fact, the Advice Memo expressly states that the Division of Advice’s conclusion that drivers using the app are not employees and thus not entitled to the right to unionize or the other protections of the National Labor Relations Act (“Act”) is based on “the common-law agency test as explicated in SuperShuttle DFW, Inc.” As noted in the Advice Memo, the Act’s definition of the term “Employees” explicitly excludes independent contractors. See 29 U.S.C. Section 152(3).

The Board Will Continue to Rely Upon the Restatement (Second) of Agency

 While noting that the Board and the General Counsel will continue to apply these tests for distinguishing between employees and independent contractors, the Advice Memo includes a summary of the “ten nonexhaustive factors enumerated in the Restatement (Second) of Agency” that the Board relies upon:

• The extent of control which, by the agreement, the master may exercise over the details of the work.
• Whether or not the one employed is engaged in a distinct occupation or business.
• 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.
• The skill required in the occupation.
• Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
• The length of time for which the person is employed.
• The method of payment, whether by the time or by the job.
• Whether the work is part of the regular business of the employer.
• Whether or not the parties believe they are creating the relation of master and servant.
• Whether the principal is or is not in business.

The Advice Memo notes that the analysis of these factors is qualitative and not “strictly quantitative” and that there is “no shorthand formula.” It also notes that the Board considers the questions of whether the worker is assuming “the opportunities and risks inherent in entrepreneurialism” with such factors likely to lead to a finding of independent contractor status.

What This Means for Businesses

The NLRB, like the DOL, will continue to place great emphasis on whether an individual is taking risk in return for potential gain, finding that this is more consistent with an independent contractor relationship than an employer-employee relationship. However, the Advice Memo indicates that the NLRB will continue to assess each situation based on its own unique facts.

________________

[1] The Advice Memo notes that the Division of Advice’s analysis and conclusions are based on Uber’s “operations and policies” as in effect during the period February 27, 2015, and August 11, 2016, which includes the dates the unfair labor practice charges were filed and the six-month statute of limitations period preceding the filing of the first charge. The Advice Memo also notes that “some current terms” for drivers may now differ from those in effect during that period.