As reported in the BNA Daily Labor Report, the Supreme Court today granted review in Murphy Oil, Ernst & Young, and Epic Systems, three court of appeals cases that address the question of whether class action waivers in mandatory employment arbitration agreements are unlawful under the National Labor Relations Act. We’ve covered this question in some depth, and will continue to do so now that the issue will be before the Court.
As Jon reported last night, an individual arbitrator has issued an award finding a California Uber driver to be an independent contractor rather than an employee. The award is wrongly decided. I won’t engage in a complete analysis here, but, to find employee status, the arbitrator relies primarily on four California cases, three of which involved FedEx drivers. The arbitrator concludes that the facts of the Uber case resemble previous cases in which workers were found to be independent contractors. She holds:
Uber drivers are not supervised; supply the cars they drive; do not wear Uber uniforms or signage; can drive simultaneously for any competitor, including Lyft, Uber’s biggest competitor; are paid for each ride and have the unfettered option to work as little or as much as they want and whenever they want in the geographical location assigned to their platform.
But to find independent contractor status on this basis, the arbitrator has to ignore some other highly relevant cases, including a 2006 California decision involving drivers who worked for a courier company, JKH Enterprises, Inc. v. Dep’t of Industrial Relations. In JKH, the court found that the drivers were employees despite the following:
[T]he drivers are free to decline to perform a particular delivery when contacted by the dispatcher, even if the driver has indicated his or her availability for the day . . . . All drivers  use their own vehicles . . . They pay for their own gas, car service and maintenance, and insurance . . . . The drivers’ cars do not bear any JKH marking or logo. And the drivers themselves do not wear uniforms or badges that evidence their affiliation or relationship with JKH. Some of the drivers perform delivery services for other companies as well . . . . The drivers receive no particular training. . . . All drivers set their own schedules and choose their own driving routes. Their work is not supervised. Indeed, JKH only has a vague idea of where its working drivers are during the business day. . . . The drivers take time off when they want to and they are not required to ask for permission in order to do so.
So, this particular Uber arbitration award is wrongly decided. Of much broader importance, however, the award brings home something critical about progressive federalism: namely, progressive states need to clarify that gig workers, like Uber drivers, are employees within the meaning of state employment law. Continue reading
As we approach January 20th, labor advocates and other progressives are placing their hopes in a handful of states and cities. The hope, as part of a “progressive federalism,” is that these states and cities will have the capacity to chart a course distinctly different from the one being pursued by the federal government.
Among these promising localities is New York, where both the state legislature and the the City Council and Mayor are already at work on a number of innovative and promising bills. But Josh Eidelson at Bloomberg Businessweek and Cole Stangler at The Village Voice report on a bill under development in New York that should be a concern to progressives and to labor. This bill, being pushed by Handy and by Tech NYC (“a newly formed statewide tech-industry trade association that includes Uber”), would allow companies to categorize their workers as independent contractors if those companies contribute to a “portable benefits” fund. Although we haven’t been able to track down the official legislative language yet, news reporting on the bill suggests that it will function as follows: Gig-economy firms that wish to take advantage of the new law would contribute 2.5% “of the fee for each job performed by the gig economy worker” to a portable benefits fund. Workers would then be permitted to use the monies in their account to purchase a health or retirement plan, or perhaps other benefits. In exchange, all those who work for participating firms would be classified as independent contractors under state law as long as they are permitted to choose their schedules and work for other companies.
Put somewhat bluntly, the proposed bill would allow gig firms to buy their way out of New York employment law for a fee equal to 2.5% of each job performed by their workers. Continue reading
During the last few years of the Obama Presidency, we saw a productive debate over the question of whether changes in the organization of work called for a new legal categorization of workers. In particular, the question was whether we need a third category, intermediate between “employee” and “independent contractor,” to capture the kinds of work arrangements typified by gig economy firms like Uber. Seth Harris and Alan Krueger, in a leading example, called for the creation of a legal category they named “independent worker,” which would grant some – but not all – protections of employment law to workers engaged in these types of work relationships.
There were several primary points of contention in the debate. One was whether such a third category actually was necessary, or whether the existing categories of employee and independent contractor were flexible and capacious enough to capture the new work relationships. Harris and Krueger took one position on this question, I took another.
A second question was whether a third category would result in ‘leveling up’ or ‘leveling down.’ One hypothesis was that if we created a new category – independent worker or something similar – workers previously classified as independent contractors would be shifted up (as it were) into the new category and thus granted expanded protections relative to what they enjoyed as contractors. The other hypothesis, the more pessimistic one, was that workers previously classified as employees would be shifted down into the new category and thus offered fewer protections relative to what they enjoyed as employees.
A federal district judge has denied Uber’s motion for judgment on the pleadings in an important wage and hour case brought by UberBlack drivers (Razak v. Uber Technologies, Inc.). The order, from October, contains important rulings on what Uber drivers have to plead on the “employee” question to survive such a motion, and on what it takes for drivers to plead a minimum wage claim in Uber litigation.
With respect to employee status, the judge found that the drivers’ complaint contains allegations that make it “plausible” that they are employees, and not independent contractors, under the Fair Labor Standards Act. Here’s the key part of the order:
[W]ith respect to the degree of control exercised by Defendants (factor one), Plaintiffs allege, inter alia, that Defendants “control the number of fares each driver receives,” “have authority to suspend or terminate a driver’s access to the App,” “are not permitted to ask for gratuity,” and “are subject to suspension or termination if they receive an unfavorable customer rating[.]” (Compl. ¶ 91). As to whether the services Plaintiffs rendered require a special skill (factor four), Plaintiffs allege that, in order to serve as Drivers, “drivers must undergo PPA training, testing, examination, a criminal background check and driving history check.” (Id. ¶ 51). As to the importance of Plaintiffs’ services to the Defendants’ business (factor six), Plaintiffs aver that Defendants’ business is to “provide on-demand car services to the general public,” and that Plaintiffs are “drivers that perform on-demand transportation services for defendants.” (Id. ¶ 1, 24). Plaintiffs also specifically allege that they are “dependent upon the business to which they render service.” (See, e.g., id. ¶157 (“Plaintiffs and Class members are financially dependent on the fare provided to them by Defendants.”))
And, as the judge concludes, “[c]ourts in this district have found that plaintiffs had adequately pled the existence of an employer-employee relationship based on far less detailed complaints.” (The court also concludes that the drivers sufficiently alleged an employer-employee relationship under Pennsylvania state law, ruling that “Plaintiffs’ Complaint sufficiently alleges facts to demonstrate that Defendants exercised a high degree of control over the way Plaintiffs’ work was conducted.”) Given that the drivers here have essentially alleged the basics of the Uber business model, the order has broad implications for Uber drivers nationally.
Two, the judge finds that the drivers have adequately alleged that Uber violated their minimum wage rights. Continue reading
Harvard’s Labor and Worklife Program (of which I am a faculty co-director) announced this morning that Sharon Block will become the new Executive Director in February. While the announcement means that the Program will lose its long-time director, Elaine Bernard, who has successfully stewarded the Program for nearly thirty years, the addition of Block will mean great things in the years ahead. Stay tuned.
The complete announcement is below:
Sharon Block, currently the Principal Deputy Assistant Secretary for Policy at the U.S. Department of Labor and Senior Counselor to the Secretary of Labor, will be the new Executive Director of Harvard University’s Labor and Worklife Program. She will join faculty co-directors Richard Freeman and Benjamin Sachs and staff members Lorette Baptiste, Larry Beeferman and John Trumpbour at the Program. Block will succeed Elaine Bernard, who has successfully served in the role of Executive Director since 1989.
“We are delighted that someone with Sharon Block’s extensive experience and deep insight into the issues facing 21st Century workers will become the Labor and Worklife Program’s new director,” said Sachs, the Kestnbaum Professor of Labor and Industry at Harvard Law School. “We welcome Sharon to Harvard and look forward to building together on the superb work the Program has done under Elaine Bernard’s leadership.”
For twenty years, Block has held key labor policy positions across the legislative and executive branches of the federal government. Early in her career she worked as an attorney at the National Labor Relations Board, and returned to the NLRB in 2012 when she was appointed to serve as a member of the Board by President Obama. She was senior counsel to the Senate HELP committee under Senator Edward Kennedy, playing a central role in the debate over the Employee Free Choice Act. She has held senior positions in the U.S. Department of Labor throughout her career.
Recently, as head of the policy office at the Department of Labor, Block hosted – with Wage and Hour Administrator David Weil and Open Societies Foundation’s Ken Zimmerman – the Department’s three-day symposium on the Future of Work. The symposium brought together a wide array of thought leaders to address how changes in labor markets and business models impact key issues such as enforcement, labor standards, workforce development, employee benefits, and data in the U.S. and around the world. Secretary of Labor Thomas Perez stated:
Sharon has been a trusted advisor, a tireless leader and an invaluable member of our team at the Labor Department as we have tackled the challenges facing working people. She has dedicated her entire career to improving the lives of workers and their families, and I am thrilled that she will lead the Labor and Worklife program and continue to make progress toward an economy that works for everyone.
Naked Capitalism recently ran a five-part series on the Uber business model. I can’t speak to the accuracy of the conclusions, but the arguments are striking and the series should go on the reading list of anyone interested in the gig economy and its implications for workers. According to the series, which is summarized in the fourth post, Uber’s business model consists of: predatory pricing, underwritten by venture capital, aimed at securing a monopoly position in the urban car service industry.
To unpack that a bit, the argument proceeds as follows: Continue reading