On Friday, February 19, 2021, the United States Department of Labor announced that prior opinions by Donald Trump’s Department of Labor relating to gig workers were withdrawn. Specifically, the Wage and Hour Division (“WHD”) withdrew two letters that strengthened employers’ arguments that gig workers, like those who drive for Uber or deliver for DoorDash, are independent contractors. As independent contractors, these individuals would not be entitled to minimum wage or overtime protections under the Fair Labor Standards Act (“FLSA”).
The two letters[1] that were withdrawn include FLSA 2021-8, which addressed whether “certain distributions of a manufacturer’s food products are employees or independent contractors under the FLSA”, and FLSA 2021-9, which addressed whether “requiring tractor-trailer truck drivers to implement safety measures required by law constitutes control by the motor carrier for purposes of their status as employees or independent contractors under the FLSA, and whether certain owners-operators are properly classified as independent contractors.” The notice of withdrawal by the WHD simply states “WHD is withdrawing opinion letters FLSA2021-4, FLSA2021-8, and FLSA2021-9. These letters were issued prematurely because they are based on rules that have not gone into effect. This withdrawal is an official ruling of the Wage and Hour Division for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259, and these letters may not be relied upon as statements of agency policy as of the date of withdrawal.”
This is a large blow to employers like Uber or Lyft that hoped to use the opinion letter in litigation that is expected to takeoff in the next few years. To highlight, the opinion letter contained the following example of “control”:
Distributors are free to set their own schedule to the point of not needing to be present to accept shipments from the manufacturer and refusing meetings with the company rep. Indeed, they may refuse to participate in company reps’ meetings with retailers, refuse to participate in the manufacturer’s suggested marketing, and refuse to participate in the manufacturer’s promotions. Distributors decide the beginning and end of their workdays, including when they make sales calls, how often they make them, and in what order, for their own independent business reasons’ the manufacturer does not dictate their schedule. And though it would not be a recommended business practice, a distributor could even stop doing business with a retailer that wanted the distributor to operate on a different schedule.
Replace distributor with driver and replace retailer with ride share company, then read it again. Sounds a bit like . . . Uber/Lyft/etc., right? The WHD’s withdrawal of this letter was a big hit and was only a taste of what employers can expect over the next four years from the Biden administration.
This decision by the WHD is at the forefront of what will most likely be a big year for gig workers in the battle of employee classifications. The decision comes a month after the Service Employees International Union (“SEIU”), on behalf of gig workers, filed suit in the California Supreme Court, and later the Alameda County Superior Court, alleging that Proposition 22 violates the state constitution and impedes the power of legislators to enact measures designed to protect employees. As a reminder, Proposition 22 exempts companies like Uber and Lyft from classifying their drivers as employees, while requiring that drivers receive certain other benefits.
Gig workers are also gaining ground in other parts of the world. On February 19, 2021, the U.K.’s Supreme Court affirmed lower court rulings that found drivers involved in the case were workers and not independent contractors. The court focused on the drivers’ “position of subordination” relative to demands that Uber places on its drivers.
In letters unrelated to gig-workers, on Friday, February 19th, the WHD issued letters FLSA2021-6[GN1] , which addresses “whether the FLSA’s ‘retail or service establishment’ exception applies to staffing firms that recruit, hire, and place employees on assignments with client, and FLSA2021[GN2] -7, which addresses whether “certain local small-town and community news source journalists are creative or learned professionals under Section 13(a)(1) of the FLSA.
[1] Although unrelated to gig workers, the WHD also withdrew FLSA2021-4, which addressed whether “a restaurant may institute a tip pool under the FLSA that includes both servers, for whom the employer takes a tip credit, as well as hosts and hostesses, for whom a tip credit is not taken.
You can access this article by Graham Newsome HERE.
