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Uber Wants ‘Legal Clarity’ From DOL to Fend Off Employee Status

Oct. 27, 2020, 10:23 PM

Uber Technologies Inc. pushed for the U.S. Labor Department to further refine regulations that could help the rideshare giant defend its business model in ongoing federal court battles over worker wages, including by clarifying that required background checks shouldn’t mean drivers are employees.

Uber provided a comment Monday as part of the public input process for the DOL’s proposal to create a shorter, simpler test for determining when a worker should be considered an independent contractor or an employee under the federal Fair Labor Standards Act.

Gig workers have sued Uber and others around the country, accusing them of misclassifying their drivers as contractors to avoid complying with the FLSA’s minimum wage and overtime protections.

The comment to the Labor Department comes as gig companies fight to preserve their business models in California, where a state appeals court last week ordered Uber and Lyft Inc. to treat their drivers as employees. The state has also become a battleground for a contentious ballot initiative to exempt the companies from a state law that makes it harder for them to label their workers as contractors.

In its letter to the DOL, Uber argued that “control over work” should be emphasized when determining worker status. It asked for certain specifics to be enshrined into the regulation.

Background checks, for example, shouldn’t be interpreted as constituting control over workers under the FLSA, the company argued. Uber previously has fought background check requirements in cities and states that have passed such measures. But it also has touted screening protocols it has put in place.

Uber also recommended the DOL clarify that in cases where the individual is responsible for determining the extent of the working relationship, that factor should weigh in favor of classification as an independent contractor.

‘Outdated’ Employment System

Uber also reiterated its long-held position that the current employment system is “outdated,” and creates a dynamic where workers can’t have independence and benefits.

“Uber believes that we can combine the best of both worlds by offering independent work opportunities to the hundreds of thousands of workers that use the Uber platform while also providing these workers with meaningful benefits,” the company’s head of federal affairs Danielle Burr, wrote on behalf of the ridehailing giant.

New laws should require companies like Uber to establish a system of “portable benefits,” including those that would be guaranteed to an employee, it said.

The company further warned that if employee status is required for drivers, there would be a steep drop in the number of jobs available. Before the pandemic, the company said 1.2 million drivers were active with the company in the U.S. If forced to convert them to hourly employees, its workforce would shrink to 260,000 full-time roles.

Other Comments

The deadline for public comments on the DOL’s proposed rule closed at midnight Tuesday.

Littler Mendelson’s lobbying arm, the Workplace Policy Institute, previously asked the department to add a safe-harbor provision to the rule, according to a comment letter it filed last weekend on behalf of gig-economy clients.

Companies want language added to the final rule that would allow them to provide independently contracted workers with paid-sick leave, jobless aid, health insurance, and other benefits, without that serving as proof of an employment relationship.

WPI filed the letter on behalf of Littler’s clients, which include a who’s who of gig companies as well as emerging startups and Fortune 100 corporations, but none of the companies formally signed the document.

Gig workers also filed comments in response to the proposal. Some rideshare drivers told the DOL that they support the rule because they want to maintain the flexibility of independent-contractor work. Others were outraged the department would advance a rulemaking to make it easier for companies to lock in their contractor status.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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