Uber and Progressive Federalism

Published January 13th, 2017 -  - 01.13.1714


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. The arbitrator here misapplied California’s Borello test. Other arbitrators undoubtedly will reach the opposite – and correct – conclusion. But instead of allowing for a hodgepodge of inconsistent individual decisions, the California legislature can, and should, make clear that under California employment law, a worker like an Uber driver is an employee.

As I argued earlier this week, New York should do the same, rather than making it even harder for gig workers to claim employment law’s protections through portable benefits legislation. According to Josh Eidelson’s reporting, David Weil – the outgoing administrator of the DOL’s Wage and Hour division – agrees with this position. Weil is:

critical of the idea of making it easier for on-demand companies to treat workers as contractors if the firms agree to contribute to benefit funds, something two influential Democrats plan to introduce in New York’s state legislature this month. While providing workers better training, benefits and retirement support is important, said Weil, “I do not believe it’s appropriate, nor wise, to bargain away baseline protections to get more of those. I think that’s perilous, to be quite frank.

In an era when worker protections are likely to depend nearly exclusively on progressive federalism, progressive states need to act. An important first step is making it clear that gig workers come under the protective umbrella of employment law.

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