Biden's NLRB Can Blow a Hole in Prop 22

One non-binding agency memo stands between gig-economy workers and their right to unionize.

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There is no doubting that Proposition 22 portends terrible things for American workers at the state level. The California ballot initiative, which exempts gig companies such as Uber, Lyft, and DoorDash from legislation that would have classified their drivers as employees instead of independent contractors for purposes of state employment laws, passed with 58 percent of the vote following an unprecedented $200 million advertising splurge. While few states possess California’s free-for-all ballot initiative system, there is nothing to stop these companies from rolling their lobbying win in California to other states that have contemplated legislation regarding gig-economy misclassification.

Understandably, there’s been a lot of handwringing by progressive writers about Prop 22’s passage—in The New York Times, The Guardian, Jacobin, New York Magazine, The Nation, The American Prospect, The New Republic, Dissent, Mother Jones, Slate, Salon, and I’m sure many more. On one hand, it is encouraging for progressive media to uniformly recognize the threat that Prop 22 poses and dedicate resources to communicating its details. Gig companies in California have essentially bought their way out of providing the sort of wages, benefits, and work schedules they would have been on the hook for if their workers had been accorded employee status. On the other hand, few writers have mentioned that the companies’ most feared legal outcome—the granting of unionizing rights to their workforces—remains readily achievable.

Labor law for all workers in the private sector (excluding agricultural and domestic labor) is determined at the federal level. The National Labor Relations Act empowers the National Labor Relations Board to make determinations of which private-sector workers qualify as employees and which qualify as independent contractors for the purposes of unionizing, collective bargaining, and other collective rights protected under the statute. State laws cannot override or encroach upon this authority.

Before the proliferation of gig-economy work, the NLRB for decades applied a ten-factor common law test to determine employment status:

  1. The extent of control which, by the agreement, the master may exercise over the details of the work.

  2. Whether or not the one employed is engaged in a distinct occupation or business.

  3. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.

  4. The skill required in the particular occupation.

  5. Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.

  6. The length of time for which the person is employed.

  7. The method of payment, whether by the time or by the job.

  8. Whether or not the work is part of the regular business of the employer.

  9. Whether or not the parties believe they are creating the relation of master and servant.

  10. Whether the principal is or is not in business.

No one of these factors was supposed to be determinative. Each factor had to be weighed and assessed separately. The factors originated in the principles determined by an elite legal advocacy group in its Restatement of the Law of Agency, but the test could be traced back further to the ancient “master/servant” legal relationship.

There later emerged a debate over whether a new factor, “entrepreneurial opportunity for gain or loss”, should become a sort of “hallmark” super-factor in the analysis which essentially distilled the others, or whether it should be subsumed within the “regular business” factor (or, as some opined, turn the ten-factor test into eleven). The D.C. Circuit championed the former in 2009 and held the “entrepreneurial opportunity” factor to be paramount, giving little regard to whether this opportunity existed in reality or was only theoretically possible.

The Obama Board’s FedEx decision hit back against the D.C. Circuit’s willful blindness in this area. FedEx had long insisted that its drivers could use their company-provided vehicles for non-FedEx commercial purposes; this prima facie case would therefore satisfy the D.C. Circuit’s test. But the Obama Board, focusing on the “economic realities” of the drivers’ abilities to use the vehicles, demonstrated that these workers were significantly restricted in their opportunities due to mandatory day-long shifts and company requirements that they cover the vehicles’ FedEx logos before using them for any other purpose. What was left was essentially a paper right. The other factors, when analyzed in their totality, revealed that the drivers were employees of FedEx rather than independent contractors.

Trump’s appointees soon eviscerated what progress the Obama Board made in expanding labor rights to gig workers. The Republican majority reversed the FedEx analysis in the 2019 SuperShuttle case, reinstating the D.C. Circuit’s preference for the “entrepreneurial opportunity” prism. General Counsel Peter Robb’s office released an Advice Memorandum soon after which applied the SuperShuttle holding to find that Uber drivers were independent contractors under the NLRA.

This non-binding memo is what is important for our purposes. It is riddled with numerous factual leaps which a Biden-stocked Labor Board would likely not make. For example, Democratic appointees would be unlikely to find sufficient entrepreneurial opportunity exists where drivers cannot set their own prices or market their individual services to riders. As a report from the Economic Policy Institute persuasively argues, Uber drivers cannot pick their customers; have no control over their routes once selected; are extensively supervised by algorithms; and possess little to no special skills. Indeed, the only economic “opportunity” afforded these drivers is for them to log more hours on the app.

Thus, the Biden Board could establish the drivers’ employee status through three conceivable paths: (1) by finding insufficient entrepreneurial opportunity under the SuperShuttle test; (2) by reversing SuperShuttle and reinstating the more pro-labor FedEx test; or (3) by substituting a new test altogether, such as the ABC test from AB5 that Prop 22 was written to override. (Though this last option is tempting, as the common law test badly needs updating, law professor Sanjukta Paul correctly points out that it would invite the most judicial scrutiny.)

While unionizing rights would not directly reverse the gig companies’ exemptions from state employment laws, collective bargaining would go a long way to winning protections above and beyond what those statutes provide. Uber and Lyft in particular have spent years attempting to prevent this scenario, most brazenly through their literal funding of vague “workers’ associations” (or as law professor Veena Dubal more accurately dubs them, company unions).

Unionization at the gig-economy giants remains a moon shot. These industries are prone to exceptionally high turnover and have demonstrated that they will fight tooth and nail against laws that make it easier for their workers to organize. But the gig companies’ swift mobilization against these reforms may ironically present the most encouraging sign for worker advocates going forward, as management wouldn’t be sinking this sort of war chest into a fight it thought it had already won. Media coverage of Prop 22 should make clear that the battle is just beginning.