Hunton Employment & Labor Perspectives

In a recent advice memorandum, the National Labor Relations Board (the “Board”) set forth its position that drivers for the rideshare company Uber are independent contractors, not employees, for purposes of the National Labor Relations Act (“NLRA”).  This means that the Board, as it is currently comprised, will not entertain efforts of drivers to unionize or seek other protections under the NLRA.  Because it is only a directive from the Board’s General Counsel, as opposed to a decision by the five-member Board, the advice memorandum is not appealable to a federal appellate court, and those who oppose the Board’s position will not have judicial recourse.  The Board’s advice memorandum comes on the heels of the Department of Labor’s recent opinion letter stating that workers for a “virtual marketplace company that operates in the so-called ‘on-demand’ or ‘sharing’ economy” are not employees under the Fair Labor Standards Act, and thus not covered by the law’s minimum wage and overtime requirements.

In its advice memorandum, the Board relied on a ten-factor test meant to measure a worker’s “entrepreneurial opportunity” to decide whether Uber drivers are employees or independent contractors.  According to the Board, “[t]he drivers had significant entrepreneurial opportunity by virtue of their near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber” and were thus properly classified as independent contractors.

The Board’s advice memorandum and the DOL’s opinion letter represent a significant departure from Obama-era interpretations, which held that workers in the “sharing” or “gig” industries would be considered employees, as opposed to independent contractors.   Although employers in these industries may be encouraged by the Board’s and DOL’s recent announcements, these announcements do not have any bearing on state law interpretations or requirements.  Thus, employers must still be mindful of the specific classification issues that can arise at the state level.