Alaska Employment Law

Non-compete provisions undercut employer argument

An Oakland, California, taxicab company refused to bargain with the union representing its drivers, claiming that they were independent contractors rather than employees. The NLRB found that the drivers were statutory employees and held that the company violated the NLRA by refusing to bargain with the drivers’ union. On appeal, the 9th Circuit affirmed the Board’s holding, applying the common law of agency.

The Court stated:

there is substantial evidence in the record to support the NLRB’s determination that Friendly’s taxicab drivers are “employees” within the meaning of the Act.  The NLRB relied on a number of factors that in their totality compel a finding of employee status, the most significant of these being Friendly’s prohibition on its drivers’ operating an independent business and developing entrepreneurial opportunities with customers. Additional salient indicia of control by Friendly over the means and manner of its drivers’ performance include: (1) regulating the details of how drivers must operate their taxicabs, (2) imposing discipline for refusing or delays in responding to dispatches, (3) requiring drivers to carry advertisements without receiving revenue, (4) requiring drivers to accept vouchers subject to graduated “processing fees,” (5) prohibiting subleases, (6) imposing a strict dress code, and (7) requiring training in excess of government regulations.  Although some of these factors individually may not constitute sbstantial control, the NLRB reasonably concluded that these factors taken together overcame any evidence of independent contractor status.

As part of its attempt to prevent drivers from operating independent businesses (or, in the company’s eyes, in an attempt to protect the employer’s good will), the cab company barred the drivers from using the (company-owned) cabs for calls from other cab companies; from distributing private business cards or telephone numbers; from accepting calls for service on personal cell phones; and from sub-leasing the cabs.

NLRB v. Friendly Cab Company, 2008 WL 68729 (9th Cir. Jan. 8, 2008).