Managerial prerogative, property rights, and labor control in employment status disputes

Abstract This Article explores how managerial prerogative shapes disputes over employment classification and reveals a neglected but prominent feature in legal arguments about platform worker rights—the disputed relevance of a platform’s intellectual property rights. In classification disputes, instead of denying that it has a right to control how others perform services for it, the company often concedes its employer-like authority but offers an alternative rationale: managerial prerogative. The company argues, and judges often agree, that its labor control is not the exercise of employer authority but instead reflects a prerogative of enterprise ownership, like a right to protect property and determine product lines. Thus, managerial prerogative both explains labor control and exempts that control from the statutory duties that would otherwise attach under the legal tests. Platform companies appear to have taken notice of such cases and designed their work relationships around property-based rationales. For instance, Uber uses a software “license” in which drivers agree to Uber’s authority as a condition for accessing the app. The license depicts the terms upon which drivers must affirmatively cooperate with Uber to produce transportation as simply the negative duties not to interfere with Uber’s intellectual property. The Article concludes that we must reject appeals to managerial prerogative in employment classification disputes. To assume that a property-based rationale for labor control is inconsistent with employment is to misunderstand the legal basis of employment and the purpose of statutory labor law. The appeals also rely on dubious economic assumptions and conflate property rights with agreements about the use of property.