Chicago regional office of the National Labor Relations Board filed a complaint against on-demand delivery service Postmates last week alleging labor violations against its drivers, raising a question that has dogged the gig economy since the rise of Uber: Are the drivers employees? The complaint — which challenges the legality of the company’s mandatory arbitration agreements, another controversial matter — does not explicitly address whether Postmates drivers are independent contractors versus employees entitled to protections under the National Labor Relations Act, such as the right to unionize and engage in concerted activity.
But the fact that the complaint was filed at all means that the NLRB is assuming the drivers are employees, a classification many gig economy employers have rejected because it would require them to pay for overtime, workers’ compensation and other benefits tied to employee status.
Postmates declined to comment on pending litigation, but spokeswoman April Conyers said the company considers its delivery couriers to be independent contractors. The company, based in San Francisco, has until Oct. 20 to respond to the complaint.
Postmates operates a technology platform that “connects customers with local couriers who can deliver anything from any store or restaurant in minutes,” according to its website, which lists dozens of restaurants it works with in Chicago and several suburbs.
Worker misclassification is a long-standing issue, but it has gained steam with the rise of on-demand technology platforms that dispatch with the push of a button chauffeurs, delivery drivers, house cleaners and masseuses to customers.
Chicago-based GrubHub was named in a federal lawsuit this past summer over misclassification of its drivers. The NLRB is investigating whether Uber’s drivers are employees after several brought charges of unfair labor practices. Uber has been sued repeatedly over the issue and this past spring agreed to pay $100 million to settle two class-action lawsuits, which allowed it to continue to classify drivers as independent contractors.
Though the Postmates complaint’s relevance to the misclassification debate is speculative at the moment, it does directly address another controversial topic.
In the complaint against Postmates, the NLRB alleges the company violated the National Labor Relations Act by requiring that workers enter arbitration agreements as a term of employment, thus waiving their right to pursue class or collective actions. It stems from a charge filed by a worker in October 2015. A news release from the NLRB stated that the affected parties were “employee drivers.”
The complaint also alleges workers were warned not talk to other employees about work terms and conditions, including safety issues, which the NLRB says violates federal law protecting concerted activity.
The legality of mandatory arbitration agreements is a hot topic that legal experts say is likely on its way to the Supreme Court. The circuit courts have been split.
“The NLRB says those (agreements) are unlawful,” said Fred Schwartz, a partner in the Chicago office of Barnes & Thornburg who represents management in employment cases. “Federal courts encourage those types of provisions because it reduces litigation in courts.”
Companies like arbitration agreements because they can save money and risk if they can pay people off individually and avoid going to court.
The NLRB previously ruled that requiring employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum violates federal labor law that protects concerted activity, said Alex Marks, an attorney with Chicago-based Burke, Warren, MacKay & Serritella who represents management.
Most circuit courts of appeals and federal district courts have not deferred to the NLRB on the issue, but the 7th Circuit in Chicago recently affirmed the NLRB’s position and rendered arbitration agreements within its jurisdiction unenforceable under the national act, Marks said.
“While the Supreme Court in the past has appeared to sanction class action waivers in arbitration agreements and is generally deferential to arbitration, it has not yet opined on the interplay between the Federal Arbitration Act and the NLRA, the latter of which the NLRB argues should trump,” Marks said. “This is a significant issue to monitor for all employers who utilize mandatory arbitration agreements.”