A recent decision of the New York State Department of Labor found that two former Uber drivers were employees for purposes of the state unemployment insurance scheme.  The NYDOL viewed the Uber business model from a status quo perspective and ruled that two of its drivers were not independent contractors. The decision echoes rulings from the west coast and is another blow to the Uber business model. Uber asserts that it is a ride-sharing platform that allows independent contractor drivers to match themselves to customers needing rides. Statewide audits of Uber and its relationship with its drivers may upset the applecart, which may explain – at least in part – why Uber is making a push in the direction of driverless cars.

Federal and state government agencies hungry for tax revenue are looking for opportunities to challenge independent contractor classifications, and plaintiffs’ lawyers are seeking to bring overtime claims for misclassified employees. Finally, companies in the “gig” economy should be aware that the NLRB General Counsel is intent on pursuing unfair labor practice charges asserting that misclassification is “interference with Section 7 rights under the NLRA.” We expect to see no shortage of unions willing and able to file that type of charge as part of their organizing efforts.