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In Another Blow To Worker Rights, NLRB Takes Sides Against For-Hire Drivers

For-hire drivers rally against Uber’s rapacious business model.

WASHINGTON—In a memo released May 14, a National Labor Relations Board lawyer has instructed the agency to presume that Uber drivers are independent contractors and not employees entitled to minimum wage, workers’ compensation, and the right to form unions.

The memo, written in April by associate general counsel Jayme L. Sophir, recommends that NLRB regional offices dismiss complaints that Uber illegally terminated drivers in Chicago and St. Louis and that it “provided unlawful assistance” to a labor organization representing Uber drivers in New York City. It holds that Uber’s business model, in which drivers use their own vehicles and pay their own expenses, offers “significant entrepreneurial opportunity” rather than the control over drivers a regular employer would have.

“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 independent­contractor status,” Sophir wrote. “Although Uber retained portions of drivers’ fares under a commission-based system that may usually support employee status, that factor is neutral here.”

That opinion is “not surprising in the Trump administration,” New York Taxi Workers Alliance head Bhairavi Desai told LaborPress. “It’s basically saying that corporations can rewrite the law.”

The memo follows the logic of the NLRB’s January decision that SuperShuttle airport-van drivers in the Dallas-Fort Worth area couldn’t form a union because they were independent contractors. That voided a 2014 NLRB decision that a key principle in determining workers were independent entrepreneurs was whether they genuinely were “rendering services as part of an independent business”—and not just defined as independent contractors by their employer to evade labor laws. 

Board member Lauren McFerrin, the sole dissenter in the SuperShuttle case, accused the majority of twisting the law to fit their vision of a “supposed ‘economic reality’ where workers are deemed ‘entrepreneurs’ and labor law, irrelevant.”

The NLRB under Trump has attempted to reverse several Obama-era policies and rulings that expanded workers’ rights and protections, such as proposing that fast-food franchises or companies that hire workers through temporary agencies should not be considered “joint employers” responsible for wages and working conditions.

Sophir, an attorney for a management-side law firm before she joined the NLRB in 1988, wrote that while Uber set fares, did not allow drivers to turn down fares because they weren’t profitable enough, and at the time prohibited them from accepting tips, drivers could set their own schedules, work for other app-based taxi companies, or choose to work somewhere else. 

Although drivers could only use Uber-approved vehicles, had to follow the company’s standards for their personal and car’s appearances, and could be terminated or have fares reduced if a customer complained about their attitude or the route they took, Sophir said this was not employer control, but the policies of a company “concerned with protecting their product or brand.”

Like the NLRB in the January SuperShuttle decision, Sophir contended that drivers taking on a “significant risk of loss” because they’d spent significant amounts of money on buying and maintaining their cars was another argument for them being entrepreneurs.

She said it was not “a strong or dispositive factor” that drivers performed a core function of Uber’s business.

“The company controls all their economic destiny, sets fares, and can fire them at will,” Desai responded. “The fact that you’ve been stuck with expenses doesn’t make you an entrepreneur.”

She said NYTWA would withdraw, at least for now, its 2016 complaint to the NLRB against the Independent Drivers Guild, an International Association of Machinists affiliate that advocates for Uber drivers in the New York area without collective bargaining. If Uber drivers were held to be employees, she said, the IDG would be an illegal company union because it is partially funded by Uber. 

“Workers can’t count on the court system to support them. There’s been a series of class actions that haven’t changed much for drivers,” IDG founder Jim Conigliaro Jr. said in a statement to LaborPress. “Drivers have to organize to force common-sense legislation for fair wages, benefits, and representation regardless of classification. We’re glad we didn’t wait around for the courts and started organizing years ago. Through organizing, we won important advances that put over a billion dollars in the pockets of drivers—with more to come.”

Four states, California, New Jersey, Massachusetts, and Connecticut, have tighter rules for determining when workers are independent contractors, according to the National Employment Law Project. Their wage and hour laws use what’s called the “ABC test,” which presumes that workers are employees unless they are free from control by the employer they’re doing work for; doing work that is outside that employer’s usual course of business; and engaged in an independently established business. 

The alternative, NELP warned in March, is establishing a test “that simply restates the elements of the current business models of the gig companies” and ignores how they are “setting terms of work for those who carry out their core business.” Such standards would essentially declare workers independent contractors if they signed a contract agreeing that they were, with minimal requirements such as the worker paying their own expenses and not always working at the employer’s place of business.

“We will push for more state-level legislation like the ABC-test employee status bill in California to help protect us from an anti-worker president,” Desai said in a statement May 14. “But we can’t depend solely on the law or the courts to stop worker exploitation. We can only rely on the steadfast militancy of workers who are rising up everywhere.”

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