Uber Drivers Not Employees, NLRB General Counsel Concludes

In a decision made public on May 14, 2019, the National Labor Relations Board (NLRB) General Counsel Peter Robb’s Division of Advice concluded that UberX and UberBlack drivers who drove for the company in 2015 and 2016 were independent contractors, not “employees” as that term is defined under the National Labor Relations Act, effectively denying them the protected right to organize enjoyed by other private-sector employees. The Advice Division reviews cases involving novel or significant legal theories, and is one of the principal channels through which the General Counsel exercises his discretion to pursue or drop unfair labor practice charges. Although this Advice Division decision on its face applies only to a series of NLRB charges filed by Uber drivers in 2015 and 2016, we can expect the NLRB’s investigative offices to apply the rationale broadly to both pending charges and any new charges filed by Uber drivers or, for that matter, other ride-sharing and gig-economy workers.

The Uber decision relies heavily on the NLRB’s January 2019 decision in SuperShuttle, in which the Board modified its independent-contractor analysis to give greater weight to the level of entrepreneurial control exercised by the putative employee. This emphasis on entrepreneurial control incentivizes employers to shift more economic risk onto employees on the theory that the more risk workers bear, the less likely it is that the NLRB and other agencies will consider those workers to be employees protected by workplace regulations.

In determining that Uber drivers were independent contractors, the Advice Division relied on the “near complete control of their cars and work schedules” as well as the drivers’ freedom to choose where they logged on to accept jobs and to work for Uber’s competitors when not working for Uber. As expected following the SuperShuttle decision, Advice relied on the fact that Uber’s service contract with its drivers required them to indemnify Uber for liability based on their own conduct which, it said, “lessened Uber’s motivation to control drivers’ actions.” On the other hand, Advice declined to draw a similar inference from the fact that Uber pays drivers a commission rather than a flat fee—a compensation structure the Board has traditionally found incentivizes employer control over worker activity. Advice also found that Uber’s reliance on customer reporting and reviews to identify worker-performance issues (essentially, out-sourcing the worker-surveillance aspects of supervision to the customer) showed that the company does not directly supervise drivers. In reaching this conclusion, Advice did not address the extent to which Uber monitors drivers through its app or encourages riders to rate drivers and solicits their feedback on driver performance.

GC Robb’s decision not to pursue unfair labor practice charges filed by Uber drivers is unreviewable, so for now workers in the gig economy will likely have to look elsewhere for protection if they choose to organize. One option is for state governments to extend organizing protections to ride-share drivers; at least one court has ruled that such laws are not necessarily pre-empted by the National Labor Relations Act, although they can run afoul of Anti-Trust laws if not properly drafted. The NLRB decision also does not prevent ride-share drivers and other gig workers from seeking protection from state regulators on worker issues such as wages, hours, and workplace safety.