The “gig economy” has presented a major challenge to the usual way of doing things. Gig economy companies rely on independent contractors to provide their core services, which is far cheaper than hiring employees. The problem has been whether U.S. law actually allowed them to do that.
The federal Fair Labor Standards Act has legal rules for determining whether a particular worker is an independent contractor or an employee. Employers generally haven’t had the option to choose how to classify an employee because the law determines the proper classification.
Recently, the U.S. Department of Labor ruled that at least some gig economy workers are indeed independent contractors. That not only means they won’t receive employee benefits from their companies, but that they aren’t entitled to many of the basic protections generally guaranteed to employees:
- Minimum wage protections
- 1-1/2 times overtime rate
- Employer’s share of payroll taxes
- Unemployment insurance
- Employer-paid workers’ compensation insurance
- Reimbursement for work-related expenses
Now, the National Labor Relations Board has weighed in. In a policy memo specifically about Uber drivers, this agency also ruled that Uber drivers are independent contractors and not employees. The decision means that gig economy drivers cannot officially unionize and are not protected from employer retaliation for unionizing activities.
What does that mean for the Uber drivers who recently went on strike to protest their pay and working conditions?
“Just because we can’t be a union doesn’t mean we can’t act like a union,” a spokeswoman for Rideshare Drivers United in Los Angeles told NPR, and other regional advocates agreed. Drivers can still agitate for better pay and working conditions as private citizens, although they could face push-back from the companies they work for.
Many drivers have largely given up on the DOL or NLRB ruling that they are legally employees, not contractors. They have pivoted to seeking job protections on the local and state levels. For example, last year, the New York City Taxi and Limousine Commission voted to guarantee a minimum wage of $17.22 per hour to app-based drivers and limited the overall number of drivers in the city.
Additionally, the California courts have ruled that gig-economy workers are legally employees under California law. And, there are other federal agencies that could still weigh in on whether gig-economy workers are employees or not — including the IRS.
It’s true that legal employees have greater job protections than contractors, but contractors shouldn’t assume they have no legal rights at all. If you are experiencing low pay, poor working conditions, discrimination or retaliation, you should discuss your situation with an experienced employment law attorney.