Tag: Employee Classification

NLRB Issues Complaint for Athlete Misclassification against NCAA, Pac-12, and USC

On May 18, 2023, the National Labor Relations Board’s (the Board) regional director in Region 31 issued a complaint against the National Collegiate Athletic Association (NCAA), the Pac-12 Conference, and the University of Southern California (USC), alleging they violated the National Labor Relations Act (the Act) by misclassifying college football and basketball players as “non-employee student-athletes.” The original charge was issued back in February 2022 and alleged all three entities were in violation of the Act as “joint employers” of these athletes.

While this issue is not necessarily new to higher education, the Board’s decision to issue a complaint—and issue that complaint against all three entities—is new ground, as it departs from a 2015 precedent and paves the way for student-athletes to unionize at potentially both private and now public institutions. Under the Act, the Board has authority over private-sector workers, while state labor boards have jurisdiction over employees at state institutions. However, because the students at issue in Thursday’s complaint would be considered employees of the private NCAA and Pac-12 as well as USC, all three entities would be subject to potential liability as “joint employers.” What this means for public institutions is that there is a real and likely potential that the “joint employer” doctrine will allow for an end run around the Act’s coverage exemption for public-sector entities. As such, all student-athletes could potentially seek to collectively bargain at the NCAA level.

Finding merit to the charge and issuing this complaint is a logical result of General Counsel (GC) Memorandum GC 21-08 issued by the Board’s GC Jennifer Abruzzo in late September 2021. At that time, we issued an alert detailing the GC’s desire to expand the definition of “employee” in order to bring scholarship collegiate athletes under the Act. In February 2022, we issued another alert detailing how USC was likely to be the test case for that endeavor.

Alleging the violation of Section 7 of the Act, Thursday’s complaint arises from charges filed by the National College Players Association, a nonprofit advocacy association founded by former UCLA football player Ramogi Huma. The charge and complaint asserted that USC, the Pac-12, and NCAA misclassified student-athletes in order to deny them their rights under the Act, including the right to speak about compensation and working conditions. In addition to the alleged misclassification issue, the complaint alleges that USC illegally obstructed athletes’ organizing by “maintaining unlawful rules and policies in its handbook, including restricting communications with third parties, in the media, etc.”

Colleges and universities may be tempted to minimize this issue by thinking that the shift to seeing student-athletes as employees would affect them only in the event their athletes attempt to form a union. That is not the case. While a Board determination that student-athletes are employees could lead to a renewed effort by college athletes to organize, the GC has already cautioned (and made good on that warning) that the Board will seek to issue unfair labor practice charges against colleges and universities that misclassify student-athletes as “non-employees” or engage in other violations of the Act. For example, the GC has previously made clear that protections afforded by the Act apply to concerted activity such as expressions of support for social justice issues and other advocacy. As such, higher education institutions would be wise to tread lightly into these waters when they arise, because where employee status exists, concerted efforts of those employees to speak their minds or speak out on certain issues will be viewed as protected under the Act.

The hearing on the Board’s complaint is set for November 7, 2023.

© Steptoe & Johnson PLLC. All Rights Reserved.

For more Labor and Employment Legal News, click here to visit the National Law Review.

UK Employee Classification: Uber Drivers Uber Happy

Uber employee ClassificationAs you may have seen from the extensive press coverage, the UK Employment Tribunal has delivered its much anticipated judgment in Aslam and Farrar v Uber. The case was about whether Uber drivers are self-employed contractors, or are “workers” with rights to minimum wage, statutory holidays, sick pay and breaks, amongst other workers’ rights.

In Depth

A “worker” is someone who has entered into a contract to personally do work for, or provide services to, a third party. This contract can be implied and does not have to be in writing. If that third party is a customer of the individual’s business undertaking, however, then that individual is self-employed.

Determining the status of the relationship between businesses and those they engage involves the Employment Tribunal looking beyond the terms and conditions in place between the parties to the reality of the relationship. The Tribunal will look at a number of factors to determine the true status of the relationship, but what really matters is the Tribunal’s view of how much control the business exerts over the individual, and whether or not that tips the balance away from the individual truly having the autonomy of being self-employed.

Uber’s Position

Uber said that it did not have the necessary control over drivers because

  • It is just a “platform” (through the Uber app) that links fare-paying customers to Uber drivers, rather than a transportation business.

  • Once linked, the Uber driver uses his/her own vehicle to take the customer to the requested destination.

  • There is no obligation on the drivers to work and drivers are not performance managed or subject to disciplinary procedures, although they do receive a “rating” from customers at the end of the journey.

  • Uber does not “pay” the drivers.  The drivers receive the fare paid by the customer (collected by Uber through the platform), after the deduction of Uber’s service fee. The service fee to Uber is taken as payment for the use of the app.

  • The drivers pay for the vehicle, the expenses associated with running that vehicle and their own taxi licenses.

  • It is the end-user (Uber’s customers) who contract with the drivers; they engage the drivers as self-employed contractors.

  • The drivers accept their self-employed status for tax purposes.

  • The drivers are permitted to work for other organisations, including direct competitors of Uber; they are not required to work exclusively for Uber.

The Employment Tribunal’s Decision

The Tribunal was not persuaded by Uber’s arguments nor, in relation to some aspects, Uber’s perspective on how its business operated. The Tribunal found that Uber was, indeed, running a transportation business through which the drivers provided skilled labour, from which Uber profited. The key factors were

  • That the drivers can only use the Uber app on Uber’s terms.

  • Uber interviews and “recruits” the drivers.

  • Uber handles customer complaints and often compensates customers following these complaints. Uber’s findings in respect of customer complaints are not always shared with the driver.

  • Uber accepts liability for losses, e.g., refunds to passengers, which would usually fall to a driver who was genuinely self-employed.

  • Uber does pay the drivers.

  • Uber’s ratings system (whereby the customer would rate the driver following the completion of a journey), is essentially a performance management procedure that could result in the driver being disconnected from the app.

  • Fares are fixed by Uber.

  • The language used by Uber in its PR communications is inconsistent with their argument that the drivers are self-employed.

What’s Next?

Uber has confirmed to customers and the press that it will be appealing the decision. In order to get an appeal off the ground, however, Uber will need to identify an error of law in the Tribunal’s judgment, or show that it had reached a decision which no reasonable tribunal could have reached on the facts.

How Does This Affect My Business

The analysis of an individual’s employment status will depend on the facts of each individual case. The Uber judgment therefore does not necessarily mean that all companies within the gig economy, or who engage self-employed contractors, must now give these individuals workers’ rights.

It does, however, serve as a useful reminder to review your workforce, consultancy/contractor agreements and other documents/communications and processes. Keep in mind, however, that were there to be a dispute over the status of the working relationship, a tribunal or HMRC would look beyond the contractual documents to the true relationship of the parties.

ARTICLE BY Katie L. Clark & Paul McGrath of McDermott Will & Emery

© 2016 McDermott Will & Emery