BY MICHAEL G. MCCLORY
Yesterday, BOLI announced in an “Advisory Opinion” that “Uber drivers are employees.” The agency did not reach this conclusion after studying the facts of an actual case in controversy. It admits that “no case relevant to this question has been filed with BOLI.” Nevertheless, BOLI decided to offer its (non-binding) opinion anyway. The Bullard Edge believes that the absence of an actual case may have lulled the agency into a number of generalities of analysis that are open to question.
BY MICHAEL G. MCCLORY
Yesterday, BOLI announced in an “Advisory Opinion” that “Uber drivers are employees.” The agency did not reach this conclusion after studying the facts of an actual case in controversy. It admits that “no case relevant to this question has been filed with BOLI.” Nevertheless, BOLI decided to offer its (non-binding) opinion anyway. The Bullard Edge believes that the absence of an actual case may have lulled the agency into a number of generalities of analysis that are open to question.
BOLI explained that it reached the conclusion after subjecting the relationship between Uber and its drivers to the six-factor “economic realities” test. The factors include:
- “The degree of control exercised by the alleged employer;
- The extent of the relative investments of the worker and the alleged employer;
- The degree to which the worker’s opportunity for profit and loss is determined by the alleged employer;
- The skill and initiative required in performing the job;
- The permanency of the relationship; and,
- The extent to which the work performed by the worker is an integral part of the alleged employer’s business.”
BOLI’s Advisory Opinion correctly states that “[n]o factor by itself is decisive and not all must be met to determine employment.” The caveat is somewhat superfluous in the context of the agency’s analysis, though, since BOLI states that each of the six factors as applied to the Uber/driver relationship suggests an “employment relationship” rather than independent contractor relationship.
The Bullard Edge, which has never used Uber for transportation, believes that BOLI has a fundamental misunderstanding of the “gig” economy. BOLI asserts that “Uber provides transportation services to its customers, services it cannot provide without drivers.” In reality, Uber more likely provides information services to its customers. A customer needs transportation between two locations and does not know where to find it. Uber connects a customer needing to find transportation with a provider of such services. Customers turn to Uber because they know the company has certain standards for the transportation providers that Uber certifies.
BOLI uses its misunderstanding of the business to undergird its analysis of the Uber/driver relationship. Here is a sampling of what the agency said regarding each of the factors in the economic realities test. We play the devil’s advocate on each factor.
Degree of control: While acknowledging that Uber drivers “use their own vehicles”, “may accept or reject ride requests”, and “set[] their own schedules”, BOLI contends that “Uber exercises a significant degree of control over the driver’s actual work” because it sets fares, screens drivers, and may drop drivers who perform poorly. This indicates a split of control, at best. Moreover, BOLI does not consider what drivers registered by Uber do outside of the Uber relationship (e.g., have jobs and/or drive through other services, among other things).
Relative investments: BOLI asserts that the company’s “multi-billion dollar infrastructure” renders as “negligible” a driver’s investment in a car (not insignificant these days), fuel, maintenance and insurance. That is a mouthful of a statement. Consider that as of December 2014, Uber had 162,037 active drivers on its platform. If we assume that an individual driver’s investment is between $30k and $40k, then simple math shows the total driver investment to be in the $5.67 Billion range. That is not negligible.
Worker’s profit or loss: This likely should be considered a draw. BOLI correctly observes that Uber sets the prices for ride provided by drivers. To some extent, this does limit the amount a driver may earn on a per hour basis. However, overall the worker’s individual profit or loss (considering his/her investment) does depend on how much time the worker wants to devote to the Uber relationship.
Skill and initiative: BOLI significantly discredits Uber drivers in this part of the agency’s opinion. BOLI states: “Drivers do not exercise managerial or business skills or initiative that would indicate they are operating independent businesses.” How does BOLI know? Drivers have choices on when to work within the context of the Uber relationship and when not to do that. They have choices on the ride requests they accept, including the locations and timing of accepted ride requests. Some Uber drivers are going to make more money than others and part of that undoubtedly relates to skill and initiative. At best, this is a push.
Permanency of the relationship: BOLI says that this factor “indicates an employment relationship” because as long as an Uber driver meets Uber standards, the “relationship” may “be expected to last for a long period of time.” Rather than describing any type of relationship (employment or independent contractor), BOLI’s reasoning simply begs the question as to what the relationship is. There are employment relationships and independent contractor relationships that last a long time.
Work as an integral part of business: This relates directly to BOLI’s misunderstanding of Uber’s business. BOLI says that Uber provides transportation services and that drivers are essential to such services. Another way to look at the business of Uber, as noted above, is as a transportation information middleman.
The Bullard Edge believes that the employment versus independent contractor status of Uber drivers is less than clear. For obvious reasons Uber disagrees with BOLI’s conclusions and notes that the state labor departments “in Colorado, Florida, Illinois, California and New York — have concluded the exact opposite.” As it concerns Oregon, without an actual case in controversy, it is not possible to know whether Uber or BOLI would ultimately prevail.
Best regards,
