The answer: No.
Through Shahani’s reporting, Uber drivers give clear voice to the key legal arguments about employment status. The picture of control that emerges from these interviews is unmistakable. It’s a terrific piece – and a highly recommended listen.
The Department of Labor announced today that it has withdrawn two memos (so-called Administrator’s Interpretations, or AIs) issued by David Weil’s Wage and Hour Division in 2015 and 2106. The first AI concerned the definition of employment under the Fair Labor Standards Act and helpfully clarified existing law regarding the distinction between employees and independent contractors. The second AI dealt with the related question of how to determine joint employment relationships under the Fair Labor Standards Act and the Migrant and Seasonal Worker Protection Act. We analyzed (and lauded) the first AI here and the second one here. The DOL appears to have removed the AI’s from their website; they’ll remain available here and here.
Two points. First, the AIs interpret existing law – they don’t make new law – and so the DOL’s action today doesn’t formally change anything. Second, removing the Weil memos does, however, signal the direction that this Department of Labor intends to head. For one thing, it indicates that Acosta’s DOL may refuse to interpret broadly the definitions of employment and joint employment under statutes that are meant to be read broadly. For another thing, it indicates a backtracking on the Department’s efforts to provide compliance assistance in two critical, and complicated, areas of employment law.
Last week, The National Law Journal published an update on state legislation and lawsuits regarding the classification of gig economy workers as independent contractors.
First, the article noted that the Florida Legislature has passed a bill, expected to be signed into law by Governor Rick Scott, “that classifies drivers for companies such as Uber and Lyft as independent contractors rather than employees, marking the latest state to attempt to regulate the rapidly growing and litigious ride-hailing workforce.” Other states that have passed similar legislation include Arkansas, West Virginia and Colorado.
Despite surviving multiple court challenges, the revolutionary Seattle municipal ordinance giving gig economy independent contractors the right to unionize appears to be on hold.
According to Bloomberg BNA, a Seattle city attorney announced the city will delay enforcement of the law in proceedings before the district court hearing the challenge to the ordinance last week. Uber, Lyft and a third ride hailing company had been due to submit driver information today to a union recognized as a “qualified driver representative” pursuant to the ordinance. Seattle will not requite the companies to disclose the driver information until Judge Robert S. Lasnik of the U.S. District Court for the Western District of Washington rules on a motion filed by the U.S. Chamber of Commerce, which brought the lawsuit challenging the ordinance.
A labor court judge in the state of Minas Gerais, Brazil has found that an Uber driver there is an employee of the company, taking the debate over the classification of drivers to another country. The Brazilian newspaper Zero Hora reports that the decision is the first in Brazil to recognize Uber as an employer of drivers. According to Reuters, the judge “ordered Uber to pay one driver around 30,000 reais ($10,000) in compensation for overtime, night shifts, holidays and expenses such as gasoline, water and candy for passengers.” Uber announced that it will appeal the decision. The ruling only applies to a single driver, but could open the door to more challenges.
Brazilian news portal G1 notes that the judge applied a multi-factor test for employment status under Brazilian law. Key factors included that a) users are assigned a driver by Uber, unable to select from options; b) Uber (not the passenger) pays drivers at the end of each week after withdrawing a percentage, thus going beyond simple mediation of passenger-driver business; c) transport is Uber’s primary business, as partially evidenced by its investment in automobiles vehicles; and d) Uber drivers are submissive to the company, forced to comply with strict rules in order to drive for the company.
Zero Hora also emphasized that the judge found that drivers were encouraged to drive regularly despite flexibility, and that Uber engaged in a hiring process by approving drivers.
Paul M. Secunda is Professor of Law and Director, Labor and Employment Law Program at Marquette Law School.
Although by no means a new question regarding retirement, the noteworthy growth of gig companies in the sharing economy has renewed concerns that even more American workers will lack access to employment-based retirement plans. Although some argue that the gig economy offers workers advantages including more independence and flexibility, company-sponsored retirement saving is not one of them. This is a dangerous state of affairs, as employment-based retirement plans make up a critical part of an individual’s strategy for retirement security.
Such retirement plans, like the nearly-ubiquitous 401(k) plans, provide a necessary bulwark against destitution in old age, especially given that Social Security provides only partial income replacement and few Americans have put away much in private savings. Yet, independent contractors, which is how most gig companies classify their workers, are approximately two-thirds less likely than standard employees to have access to an employer-provided retirement plan.
Much academic and judicial ink has already been spilt over whether Uber drivers and other members of the sharing economy are members of the so-called “contingent” workforce or “precariat” (part-time, leased, temporary, and per diem workers), not entitled to receive retirement benefits as part of their employment. Whether these employees are statutory employees is of utmost importance because it largely determines whether gig workers are covered by employment laws, as most such laws center on the employer-employment relationship.
What all these jobs have in common is that the work activity is happening outside of the traditional safety net of employment and are highly unstable. Whereas statutory employees are covered in the United States by numerous labor and employment law statues that provide security and protection in the workplace, workers in these alternative work arrangements are not. Once stable employment relationships have given way to relationships that are much more arms-length, regardless of whether it is a contractor situation, temporary employment, or a one-time encounter.