The National Labor Relations Board released a memorandum Tuesday that says Uber drivers are not able to unionize because they are independent contractors, not employees.
The advice memo outlines a number of factors courts consider in assessing whether a person is an independent contractor or employee, citing two specifically pertinent to the shared-ride and taxicab industries: (1) the extent of the company’s control over the manner and means by which drivers conduct business and (2) the relationship between the company’s compensation and the amount of fares collected.
According to Bloomberg Law, states have begun classifying and working to regulate gig employment such as Uber and other sharing economy services. Some have loosened rules and others have sought to increase regulation in the area.
The memo, dated April 16, explains that drivers hold virtually complete control of their cars, work schedules, and log-in locations, as well as freedom to drive for competitors such as Lyft.
“On any given day, at any free moment, UberX drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing rideshare service, or pursuing a different venture altogether.”
In March, Uber reached a $20 million preliminary settlement agreement in a class action lawsuit over how the company classifies its drivers, involving drivers from California and Massachusetts who disagreed with Uber’s policy of classifying its drivers as independent contractors. Classifying drivers as contractors lowers costs for Uber by avoiding employee benefits like healthcare coverage and overtime.