According to recent guidance issued by the DOL and NLRB, workers in the so-called “gig,” “on-demand,” or “sharing” economy are independent contractors, not employees. This represents a significant departure from Obama-era policy and is expected to have significant consequences for both employers and workers in that sector.
First, on April 29, 2019, the DOL issued letter guidance in response to a request by an unnamed “virtual marketplace” company which operates a platform which directly connects consumers with “service providers,” i.e., workers who provide a variety of services, such as transportation, delivery, shopping, moving, cleaning, and household services. In applying the longstanding “economic dependence” test, the DOL found that these service providers did not fit into any “traditional employment paradigm” covered by applicable law. Instead, the DOL determined that the company simply provides a “referral service,” which “empowers service providers to provide services to end-market consumers.” As a result, the DOL concluded that these service providers are not covered by the FLSA, and therefore are not entitled to be paid the federal minimum wage or overtime. Although this opinion is technically limited to the circumstances of this one unnamed company, it will undoubtedly be cited by other employers in this space.
Then, less than three weeks later, on May 14, 2019, the NLRB released a memorandum in which it found that Uber drivers are contractors. The Board based its decision largely on its finding that these drivers had “near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber.” The Board further observed that, “[o]n any given day, at any free moment, 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.” Notably, the Board repeatedly cited its recent SuperShuttle DFW, Inc. decision, which we have previously covered here on this blog. That January 2019 decision substantially modified the standard for classifying independent contractors and made it more likely that workers fall outside the NLRA’s protections. Accordingly, the Board’s finding here does not come as an enormous surprise. As a result of this decision, Uber drivers – and other gig economy workers – are likely to find it extremely difficult to form a union.
These developments track the employer-friendly positions that the current administration’s labor and employment agencies have been adopting over the past two years. However, employers should be cautioned that properly classifying workers is not only a matter of federal law; it also requires careful attention to overlapping state laws. Additionally, as we have seen, these agencies’ positions can change quickly – the previous administration took an entirely different approach to these issues, with the Obama DOL publishing guidance that strongly suggested that gig economy workers should be classified as employees.
Given the ever-changing landscape of these and other employment law issues, we recommend subscribing to the blog for future updates. And, if you have any questions about these topics, please do not hesitate to contact your Akerman Labor & Employment attorney.