Late last month, the U.S. Department of Labor issued an opinion letter that could have a major impact on “gig economy” workers. When people get work from an app or technology platform — a “virtual marketplace” — they can be considered independent contractors rather than employees. This is true even when the work they perform is part of a company’s core business.
Whether gig economy companies like Uber and Lyft could legally rely on contractors for their core services has been an open question. It’s also an important one because many important benefits are only available to employees, not contractors. For example, contractors aren’t entitled to the minimum wage or overtime pay. They also don’t get employer-shared payroll taxes, workers’ comp through an employer or unemployment insurance.
Although the Labor Department’s opinion letter didn’t name a particular company, it noted that the “virtual marketplace” includes transportation, deliveries, cleaning, moving and a variety of household services. Experts expect the letter to allow more companies to classify their workers as contractors. The letter is not a binding regulation, but it could be persuasive to courts.
Now, the National Labor Relations Board (NLRB) has weighed in on the question. It recently issued an advisory memo concluding that Uber drivers are not employees but independent contractors. Without employee status, the workers don’t have the right to unionize or bargain collectively.
The NLRB memo serves only as a recommendation for future cases but is not expected to impact existing ones.
The memo also comes almost immediately after Uber and Lyft drivers staged a national strike to protest low wages and poor working conditions.
The new ruling could mean that drivers in future strikes may face retaliation from their employers for any collective actions they may take.
Some of their advocacy has been effective despite the workers lacking official union status. In December, the New York City Taxi and Limousine Commission voted to require a minimum base rate of $17.22 for ride-hailing drivers and agreed to limit for-hire vehicle licenses in the city.
One driver who has been organizing through the Philadelphia Drivers Union noted that the employee classification question is still open despite the Labor Department letter and the NLRB memo. For one thing, there are other federal agencies — such as the IRS — that could still rule on the matter. And, advocacy will continue on the state and local levels
“So, what I tell people is just because the NLRB says we are not employees doesn’t mean state regulators won’t have a different classification, and that’s what we have to keep fighting for,” she said.