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.
Recommended For You
Postmates and its lawyers did not immediately return requests seeking comment, and the Chicago-based employee who lodged the labor complaint was not immediately reached for comment. Kearney, now of counsel to Cozen O'Connor in the firm's Washington office, did not immediately comment on the newly disclosed memo.
The NLRB's complaint found that Postmates violated protected rights by prohibiting employees from discussing the terms and condition of employment, including safety, with other drivers.
The weight of the memo remains unclear, considering that new NLRB leadership—including Peter Robb, the general counsel—has disavowed many Obama-era policies and rules. Early on, Robb told regional directors that worker classification—employees versus independent contractors—was not a priority.
Postmates referred to its 25,000 couriers that walk, bike or drive to make deliveries as independent contractors. Couriers were required to submit to a background check and also sign a nondisclosure agreement.
The question the Postmates case confronted is central to other gig economy companies, and the issue remains unresolved. Many on-demand companies, including Lyft and Uber, built their businesses around workers who have flexibility and the freedom to not answer to a boss, clock in at certain times and also work for other services simultaneously.
A San Francisco federal judge ruled in February that a driver for the online delivery service Grubhub was an independent contractor. The judge concluded Grubhub "exercised little control over the details of the driver's work."
In the NLRB advice memo, Kearney said that in determining a worker classification "there is no shorthand formula or magic phrase that can be applied to find the answer." His memo states that independent contractor status should be interpreted narrowly. In this case, Postmates couriers were set up with the company for long-term, uninterrupted employment, and they did not set their own fees. The workers were supplied with an app, credit card and brand markings and are closely monitored through a customer rating system.
"The board gives weight to actual, and not merely theoretical, entrepreneurial opportunity, and also evaluates the constraints imposed by a company on the individual's ability to pursue this opportunity," the 2016 memo said.
The right to pursue collective action, despite an arbitration agreement, is central to pending U.S. Supreme Court litigation. The justices in October heard a trio of combined disputes over whether to uphold employee contracts that ban class actions.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
