The Trump administration is limiting legal protections for many gig workers, the top prosecutors at the Labor Department and National Labor Relations Board told Bloomberg Law June 13.
A pair of recent agency memos sketch out the administration’s approach to the hotly contested question whether Uber drivers, Postmates food deliverers, and other gig workers are employees or independent contractors, Labor Solicitor Kate O’Scannlain and NLRB General Counsel Peter Robb said in separate interviews. The missives are tailored to specific factual circumstances, but they show that the agencies are likely to find that many gig workers are contractors.
“Although it is very much a fact-specific inquiry, the relationship between virtual marketplace companies and service providers does not always fit neatly into the employer-employee relationship,” O’Scannlain said. A recent DOL opinion letter is meant “to provide further guidance and clarity to employers to ensure they understand their obligations,” she said.
Contractors are treated largely like entrepreneurs under federal labor and employment laws. That means they don’t have the right to minimum wages and overtime pay, workers’ compensation, and unemployment insurance benefits. They also don’t have the right to unionize.
The Labor Department letter and a separate a NLRB advice memo focus largely on gig workers’ control over their schedules to determine that they are contractors. The department also looked at the nature of the business involved and whether the tasks the workers perform were related to the company’s “primary purpose.”
The moves mark a shift from the Obama administration’s view that the overwhelming share of workers should be considered employees. Together, they indicate the agencies aren’t likely to take up cases from gig workers alleging labor and employment violations on the job.
Control and ‘Purpose’
The Labor Department’s Wage and Hour Division in an April opinion letter said that workers at an unnamed gig company aren’t employees, protected by federal minimum wage and overtime requirements. O’Scannlain, as the department’s top lawyer, is responsible for enforcing those requirements in the courts.
The DOL relied on a six-factor test used by the U.S. Supreme Court, which examines the control the company wields over the workers and whether the workers’ tasks are tied to the company’s primary purpose. The unnamed company at issue in the opinion letter said it is a “referral business” that links workers to new opportunities.
O’Scannlain said the department will continue to use the test to determine whether other gig workers are contractors, noting that the law and the regulations interpreting it haven’t been updated in decades. She and Jeff Rogoff, the DOL’s regional solicitor for New York, said they weren’t aware of any cases in which the department has found that gig workers are employees under that test.
The NLRB’s general counsel’s office in a memo made public some two weeks later said Uber drivers are independent contractors, excluded from protections for union and other activity. Robb’s office cited the drivers’ “virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber.”
“As I said at the time, it was very specific to the facts of the case,” Robb told Bloomberg Law. “The board gave some general guidance in the SuperShuttle case and I tried to apply that.”
The NLRB in January ruled that shuttle van drivers described by SuperShuttle as franchisees weren’t employees protected by the National Labor Relations Act.
States a Different Story
The NLRB has the sole power to enforce labor organizing and related laws, meaning that gig workers who want to unionize are likely out of luck. But the Labor Department letter will have little impact on wage and hour requirements for workers and businesses in places like California and New Jersey, where lawmakers and courts have taken an expansive view to worker classification under state law.
“If employers broadly rely on this opinion letter, they do so at their peril,” Terri Gerstein, who previously ran the New York attorney general’s labor division, told Bloomberg Law. “States and localities have become increasingly active and aggressive about protecting workers’ rights, and the opinion letter has no impact at all on their enforcement.”
California’s Supreme Court in a landmark decision last year set out a new classification test that’s expected to mean most gig workers must be treated as employees under state law. The state legislature is considering a bill that would enshrine that three-part test in California law.
Officials in New Jersey, which uses the same classification test, said shortly after the DOL letter was issued that it would have little impact in the Garden State.