The National Labor Relations Board (NLRB) released an Advice Memorandum on May 14, 2019, almost a month after it was originally issued, stating Uber drivers are independent contractors and not employees. This classification will mean they have no right to form a union or to bargain collectively. If treated as employees, Uber’s labor costs would probably rise 20 to 30 percent.
The announcement comes just after the U.S. Department of Labor (DOL) issued a new opinion letter, on April 29, 2019, that addresses compliance issues related to the Fair Labor Standards Act (FLSA) and a national day of action by Uber and Lyft drivers. Uber also made its stock market debut on May 10, 2019.
On January 25, 2019, the National Labor Relations Board returned to its long-standing independent-contractor standard, reaffirming the Board’s adherence to the traditional common-law test. In doing so, the Board clarified the role entrepreneurial opportunity plays in its determination of independent-contractor status, as the D.C. Circuit has recognized.
The Board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain. These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s finding that the franchisees are not employees under the Act. The decision affirms the Acting Regional Director’s finding that the franchisees are independent contractors.
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