In National Labor Relations Board v. Friendly Cab Company, (— F.3d —, 2008 WL 68729, C.A.9, Jan. 8, 2008), the United States Court of Appeals considered a taxicab company’s appeal of a National Labor Relations Board decision that the company must negotiate with its drivers’ union because the drivers are not independent contractors, but are instead employees, as defined by the National Labor Relations Act.
Citing an array of rules imposed upon the drivers by the company, most significantly restrictions on the drivers’ ability to seek other entrepreneurial opportunities, the appellate court upheld the decision that they were employees and that the company must therefore negotiate with their union.
Facts
Friendly Cab Company (“Friendly”) leases taxicabs to drivers who operate them in and around Oakland, California. The leases stipulate that there is no employer-employee relationship between the company and the drivers. The drivers must also comply with the terms described in Friendly’s policy manual and standard operating procedures (“SOP”), including stipulations on how they should drive, where they should park, how they should dress, and so forth. The SOP additionally restricts the drivers from pursuing outside business interests, barring them from distributing their own business cards or phone numbers, “as these constitute an interference in company business and a form of competition not permitted while working under the lease.”
Drivers unhappy with Friendly’s policies sought representation from the East Bay Taxi Drivers Association (“Union”). The Union filed a petition with the National Labor Relations Board (“NLRB”) seeking a determination that the drivers were employees, as defined by the National Labor Relations Act (“Act”), and seeking a vote of the drivers to make the Union their representative. After the Union was certified as the drivers’ official representative, its officials tried repeatedly to negotiate with Friendly, which refused on the grounds that it would bring suit to overturn the NLRB decision. The Union filed an unfair labor practice charge with the NLRB that Friendly Cab was violating the Act by refusing to negotiate. An Administrative Law Judge (“ALJ”) agreed, and the NLRB affirmed the ALJ’s recommendation that Friendly be ordered to cease and desist from violating the Act and to meet and bargain with the Union. Friendly appealed.
Decision
The entire dispute hinged upon one question, the court said: “Are Friendly’s taxicab drivers ’employees’ or ‘independent contractors’ under the Act?” If they are employees, they are protected by the Act and entitled to collective bargaining representation. If they are independent contractors, they have no such rights.
Substantial evidence showed that Friendly exercised significant control over how the drivers did their jobs, the court noted, adding “We place particular significance on Friendly’s requirement that its drivers may not engage in entrepreneurial opportunities.” Were the drivers independent contractors, they should have that right, the court reasoned. “These limitations do not allow Friendly’s drivers the entrepreneurial freedom to develop their own business interests like true independent contractors.”
A number of factors also supported NLRB’s determination that the drivers were employees, the court said, such as the company imposing regulations of their conduct on the job, discipline upon them, requiring they carry advertisements without receiving additional revenue, and requiring training exceeding government regulations. These factors, combined with the restrictions on drivers acting to further their own business interests, demonstrate that for the purposes of the Act the drivers were employees of Friendly and Friendly was therefore required to negotiate with their Union. The NLRB decision was affirmed.