Postmates Inc. couriers who challenged the company's mandatory arbitration agreements should be classified as employees, not independent contractors, according to an internal memo the National Labor Relations Board disclosed on Tuesday.

The advice memo issued by the NLRB's general counsel's office to a regional director in September 2016 found merit to accusations that the San Francisco on-demand delivery service was misclassifying its workforce.

The memo, written by Barry Kearney, then an associate general counsel in the NLRB's advice division, indicated that the company violated the National Labor Relations Act by requiring the drivers to enter into the agreements as a term of employment, and waiving their rights to pursue class or collective actions.

The NLRB issued a complaint against Postmates, represented by Littler Mendelson, in October 2016. Postmates in February 2017 updated its employment agreements to let workers opt out of mandatory arbitration. The agency's case was closed last December. Advice memos in many instances are published, at the discretion of the agency's general counsel, in closed disputes.

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