The National Labor Relations Board, handing an important victory to Uber, has concluded that the company’s drivers are contractors, not employees.
The move, outlined by the board’s general counsel in a memorandum released Tuesday, deals a blow to drivers' efforts to band together to demand higher pay and better working conditions from Uber and its main rival in the ride-hailing business, Lyft.
Contractors lack the protection given to employees under federal law — and enforced by the labor board — for unionizing and other collective activity, such as protesting the policies of employers. As a practical matter, the conclusion makes it extremely difficult for Uber drivers to form a union.
The board’s general counsel, an appointee of President Trump, does not have purview over other laws applying to employees, such as minimum wage and overtime protections.
Still, had the board found that drivers were employees rather than contractors, it could have put pressure on the regulators who enforce such laws to reach the same conclusion.
If companies like Uber and Lyft were forced by regulators or courts to treat drivers as employees, it would probably raise their labor costs by 20 to 30 percent, according to industry estimates. Both companies have seen their stock prices fall after recent public offerings amid questions about their financial prospects.
The memo follows an opinion last month by the Labor Department arguing that workers at an unnamed company with a business model like Uber’s were contractors, not employees.
In both cases, the conclusions reversed the approach adopted by the Obama administration, which had suggested that people who find work through apps in the so-called gig economy were likely to be considered employees. In 2016, the labor board issued a complaint against Postmates, a delivery service, over allegations that the company had interfered with workers’ ability to exercise their labor rights.
The agency could not have issued that complaint without first concluding that Postmates couriers were employees.
The memo released on Tuesday, which was dated April 16, has no long-term value as a precedent and can be reversed by a future general counsel. Its immediate consequence is to render moot three formal accusations, filed in different parts of the country, that Uber had violated federal labor law. The memo instructs the board’s regional offices to dismiss the charges if the people who made them don’t withdraw them first.
