NLRB Revives A More Stringent Standard For Independent Contractor Classification
Consistent with other changes instituted by the National Labor Relations Board (NLRB) since President Joseph R. Biden took office, this past week, the Board reverted to the pre-Trump-era FedEx Home Delivery, 361 NLRB 610 (2014) (FedEx II), standard for determining whether a worker is an employee or independent contractor.
Section 2(3) of the National Labor Relations Act (the “Act”), as amended by the Taft Hartley Act in 1947, excludes from the definition of a covered “employee” “any individual having the status of an independent contractor.” 29 U.S.C. § 152(3). As such, the issue of whether an individual is an “employee” or “independent contractor” has been an issue of great importance in determining whether workers are entitled to the protections of the Act (including the right to unionize and engage in concerted activity).
In 2014, in FedEx II, the Board reaffirmed longstanding principles and asserted that its inquiry in determining independent contractor status would be guided by the non-exhaustive common-law factors enumerated in the Restatement (Second) of Agency, Section 220 (1958), which are as follows:
- the extent of control which, by the agreement, the master may exercise over the details of the work;
- whether or not the one employed is engaged in a distinct occupation or business;
- the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
- the skill required in the particular occupation;
- whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
- the length of time for which the person is employed;
- the method of payment, whether by the time or by the job;
- whether or not the work is a part of the regular business of the employer;
- whether or not the parties believe they are creating the relation of master and servant; and
- whether the principal is or is not in business.
There, the Board further noted that “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.”
In 2019, the Trump Board overruled FedEx II noting that “entrepreneurial opportunity ... has always been at the core of the common-law test” and that FedEx II “rather than considering the entrepreneurial opportunity, if any, afforded a putative contractor by the common-law factors…limited that inquiry to a single aspect of a newly coined factor, thereby altering the test and greatly diminishing the significance of entrepreneurial opportunity to the analysis.” SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) (“SuperShuttle”).
This week, in Atlanta Opera, Inc. the Biden NLRB referred to the SuperShuttle decision as adopting a “flawed view” of Board law and decided to overrule SuperShuttle, to reinstate the Board’s FedEx II approach.
Specifically, it noted that the Board’s FedEx II approach, unlike SuperShuttle, properly rejected the notion that entrepreneurial opportunity is an “animating principle” of the independent-contractor test. The majority, in a 3-1 decision, said the Board should instead consider whether workers have entrepreneurial opportunities when examining whether workers are performing work "as part of an independent business” (which is just one of ten factors to consider). Applying the FedEx standard, the Board found that makeup artists, wig artists, and hairstylists working at and for the Atlanta Opera were not independent contractors, but instead were “employees” under the Section 2(3) of the Act, and therefore could pursue union representation.
The Board’s decision emphasizes that the determination of independent contractor status requires a complex analysis of the employer-employee relationship. It is worth noting that many other laws, at the state and federal level, set forth different independent contractor rules and factors. As such, it remains as important as ever to stay compliant when it comes to worker classification.
If you have questions or concerns about the potential unionization of your business and/or would like guidance on compliance strategies and training relating to potential organizing efforts, or need advice related to the National Labor Relations Act, please reach out to your favorite CDF attorney, the author of this blog post, Carolina Schwalbach, or Mark S. Spring, Chair of CDF’s Traditional Labor Law Practice Group.