Sept. 20, 2019 – A new report by EPI Distinguished Fellow Lawrence Mishel and Director of Government Affairs Celine McNicholas critiques a recent National Labor Relations Board (NLRB) General Counsel advice memo that claims Uber drivers should be considered independent contractors rather than employees. The authors argue that even if you accept the legal framework that the General Counsel employs, the memo does not accurately assess the realities of Uber driving, claiming that drivers have more control over their work than they actually do. Moreover, the General Counsel vastly overstates Uber drivers’ “entrepreneurial freedom” as a way to dismiss the basic facts of Uber control over drivers.
“The NLRB’s General Counsel either ignores, dismisses, or misstates the realities that Uber drivers face, in order to wrongly conclude they are independent contractors,” said Mishel. “By misclassifying them, the memo effectively robs Uber drivers—and similar workers—of the rights afforded to them by the National Labor Relations Act to engage in collective action—like collective bargaining—to improve their working conditions.”
The authors note how Uber drivers do not resemble independent entrepreneurs:
- Uber drivers can’t expand revenues because they can’t control prices or expand their customer base through marketing.
- Unlike a typical enterprise, Uber drivers do not build earnings as they get more experience.
- Uber drivers are not able to choose their customers—drivers are penalized for rejecting or not accepting trips.
- Drivers do not even have basic control over how they deliver rides—drivers can be penalized for picking inefficient routes (as per Uber’s judgment).
- Uber drivers are “supervised” by semi-automated and algorithmic systems that track their acceptance rates, time on trips, speed, customer ratings, and other factors, and drivers can be “deactivated” based on these factors.
- Because Uber charges riders a predetermined rate but pays drivers based on actual miles covered and minutes spent, the company clearly has a financial incentive to control drivers.
- Uber driver earnings also do not mirror those of entrepreneurs. Uber drivers earn minimum wages, or less, and Uber’s own IPO compares driver earnings to those in low-wage industries such as retail and restaurants.
“The General Counsel’s memo buys into a dangerous political argument that digital platform companies like Uber should not have to play by the same rules as other employers,” said McNicholas. “Policymakers in California rejected this argument when they recently enacted AB-5, which will make it more difficult for companies to misclassify workers.”
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