For decades, taxi drivers have been classified as independent contractors, and thus unable to join unions. But a case decided last week shows that the legal ground has shifted — potentially allowing vast swaths of the industry to organize.
The case concerns taxi drivers in Tucson, Ariz., where the Office and Professional Employees International Union has been running an association for taxi drivers to advocate for their rights. That’s the case in many cities, where unions have organized taxi drivers as interest groups, but lack the power to collectively bargain with the companies they work for.
Two years ago, the union petitioned the National Labor Relations Board for an election at AAA Transportation/Yellow Cab. A regional director denied it, ruling that the drivers were independent contractors. That followed precedent in dozens of previous cases.
But the union appealed, because by that time, the full board had issued another consequential decision: FedEx Home Delivery, concerning the status of delivery drivers. In its ruling, the board laid out a new test for independent contractor status that relies more heavily on what’s called “entrepreneurial opportunity.” Rather than just theoretically being in business for themselves, the judges said, true independent contractors must have a meaningful opportunity for loss or gain. FedEx has since tweaked its business model in order to comply.
"As with roulette, the drivers are playing a game over which they have no control. The Employer, like the proverbial house, controls and benefits from the game by controlling its parameters."
— NLRB Regional Director Cornele Overstreet
The decision paralleled another landmark ruling earlier this year, Browning-Ferris Industries, which held that employees of a subcontracted company can bargain with their employers’ employer, if it functionally controls their wages and working conditions.
“The upshot is that the board’s emphasis on workers’ real-world experiences makes it harder for companies to turn employees into independent contractors by creating the appearance that workers can ‘be their own bosses,'” says Seattle University labor law professor Charlotte Garden.
So the Board remanded the case back to the regional director. After taking another look at the facts, he decided that the Tuscon taxi drivers didn’t qualify for independent contractor status under the new test, for a host of reasons: Drivers leased cars from Yellow Cab bearing the company logo, had to undergo training, and were required to abide by a number of rules.
Perhaps the most important factor, however, was the fact that drivers relied heavily on Yellow Cab’s dispatch system. Unlike taxis in dense urban areas, those in Tucson are rarely hailed on the street; most are sent out in response to calls. The driver rarely know anything about the nature of a job before they’re forced to accept it, the regional director found, and “few if any” drivers had been able to cultivate enough clients to survive independently.
Now, the approximately 200 drivers are free to hold an election, and Yellow Cab will have to negotiate a contract with them if they win. The same could be true of many other taxi companies across the country — but mostly in smaller cities, where dispatch systems are the norm.
“My impression is that a cab driver in New York or D.C. or San Francisco gets a lot of their business from being waved down, so that’s a quite different situation because the company has no control over you,” says attorney Melvin Schwarzwald, who represented OPIEU in the case. Still, he thinks this is just the first of many cases that could come out in unions’ favor after the shift in interpretation under FedEx.
"There are all kind of people in the world who are considered independent contractors,” Schwarzwald says. “Many of us think there are a whole lot of people out there in lots of jobs could probably make a case as these employees did.”
The obvious next question: How would this play in a case with drivers for on-demand services like Uber? That’s harder to say — the app does function like a kind of dispatch system, even though drivers have more control over how much they work. But some legal bodies are already starting to rule that Uber drivers are employees, which could ultimately make unionizing an option (as well as entitle drivers to other protections under the Fair Labor Standards Act, like disability insurance and workers compensation).
We’ll have to wait and see whether many unions give it a try. In the mean time, the Teamsters in Seattle are skipping the NLRB process altogether, trying a novel approach to grant collective bargaining-like rights to independent contractors through a city law. That idea also faces an uncertain future in the courts.
But one thing’s for sure: The landscape is changing quickly.