Uber drivers aren’t legal “employees” for the purposes of federal labor laws, the U.S. labor board general counsel’s office said in an advisory memo released May 14.

The National Labor Relations Board’s advice memo, dated April 16, means the agency’s general counsel will take the position that workers for companies such as Uber are excluded from federal protections for workplace organizing activities, like trying to form or join a union. In practice, that means Uber workers are without a federal forum if they want to unionize or file what’s known as unfair labor practice charges.

“Whereas a decision by the full five-member NLRB is generally ‘appealable’ to a federal appellate court, decisions by the General Counsel’s Office not to issue an unfair labor practice are not subject to judicial review,” said Richard Reibstein, a partner representing employers at Locke Lord LLP’s New York City office.

Union organizers that have worked with Uber employees urged caution about the negative effects of the NLRB’s decision on their efforts.

Losing the ability to unionize through the NLRB does make fighting for improved pay and working conditions more difficult, Bhairavi Desai, executive director of New York Taxi Workers Alliance, told Bloomberg Law May 14. But independent contractors can still make gains through organizing, Desai said, pointing to a recent New York City regulation setting a pay standard for for-hire drivers.

The decision comes as Uber has struggled to meet expectations in the days following its widely anticipated initial public offering.

“We are focused on improving the quality and security of independent work, while preserving the flexibility drivers and couriers tell us they value,” a spokesperson for Uber told Bloomberg Law in a May 14 email. The company noted that it offers optional on-trip injury protection, and funds course-work or certifications through a partnership with Arizona State University for eligible drivers and their families.

Feds v. States

Regulations about worker classification can have a significant impact on gig economy companies and franchised businesses. The NLRB during President Barack Obama’s administration concluded that couriers for Postmates—which has a similar business structure to Uber and other gig companies—are legal employees.

Federal agencies during President Donald Trump’s administration have been working to loosen up those rules in employers’ favor, while some liberal states like California are working to increase regulation in the area.

“The crazy quilt of state law tests for independent contractor status is not affected by the issuance of the Advice Memorandum,” Reibstein told Bloomberg Law. “The primary battleground for independent contractor misclassification issues remains at the state level.”

The Department of Labor has also concluded that so-called gig workers are independent contractors not entitled to minimum wages and overtime pay.

“We will push for more state-level legislation” like the “employee status bill in California to help protect us from an anti-worker president,” Desai said in a statement. “But we can’t depend solely on the law or the courts to stop worker exploitation. We can only rely on the steadfast militancy of workers who are rising up everywhere.”

NLRB Cites Drivers’ 'Entrepreneurial Opportunity’

The board relied on a recent decision and legal test from a case known as SuperShuttle DFW, in issuing the advice memo regarding three separate claims against Uber for unfair labor practices.

The NLRB in SuperShuttle overturned an existing standard for deciding when workers are “employees” protected by federal workplace laws. It established a new test that centers on “entrepreneurial opportunity” and considers at least 10 other factors about the employment relationship to answer the employee or contractor question.

“Although Uber retained portions of drivers’ fares under a commission-based system that may usually support employee status, that factor is neutral here because Uber’s business model avoids the control of drivers traditionally associated with such systems and affords drivers significant entrepreneurial opportunity,” the NLRB’s Division of Advice writes in the memo.

“Drivers’ virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity,” the NLRB said.

The board’s lone Democrat, Lauren McFerran, has criticized the new SuperShuttle test, calling it the “economic unrealities” test.

NLRB Chairman John Ring has also suggested the board might propose a new regulation—as opposed to a policy statement or precedential case decision—to clarify the difference between independent contractors and employees for union organizing purposes.

The NLRB notes in its memo that Uber has “significantly revised its operations and policies numerous times” since the company was founded in 2013, and says its analysis relates “to the period of February 27, 2015, to August 11, 2016.”

“Workers can’t count on the court system to support them,” Jim Conigliaro Jr., founder of the Independent Driver’s Guild, told Bloomberg Law in a May 14 email. “Drivers have to organize to force common sense legislation for fair wages, benefits, and representation regardless of classification.”

The IDG is an affiliate of the International Association of Machinists & Aerospace Worker working to organize app-based drivers.