Labor Board Reverts to Previous Method For Classifying Workers as Independent Contractors

  • Jan 29, 2019
  • NLRB
  • Meggen E. Lindsay

In a significant and widely anticipated decision, the National Labor Relations Board (NLRB) returned to its pre-Obama-era method of determining whether a worker is an independent contractor or an employee.

The decision, SuperShuttle DFW, Inc., is considered a win for employers because it will now be easier to classify workers as independent contractors who therefore are not subject to unionization under the National Labor Relations Act.

A Return to Traditional Factors

According to the NRLB, Friday’s decision reaffirmed the NLRB’s adherence to the traditional common-law test, which considers 10 factors, including an employer’s control of the work and a worker’s skill, in determining employment status. The decision overrules FedEx Home Delivery, 361 NLRB No. 55 (2014) a case that had modified this test by “severely limiting” the significance of workers’ entrepreneurial opportunity for economic gain when analyzing whether they were contractors or employees, the NLRB stated.

While “entrepreneurial opportunity” is not a factor in the test, the NLRB explained in SuperShuttle DFW, Inc. that “entrepreneurial opportunity, like employer control, is a principle to help evaluate the overall significance” of the factors. Indeed, “common-law factors that support a worker’s entrepreneurial opportunity indicate independent contractor status; factors that support employer control indicate employee status.”

The SuperShuttle DFW, Inc. case dates back to 2010, when shuttle-van-driver franchisees at Dallas-Fort Worth Airport sought to unionize. In applying its renewed standard, the NLRB determined that the drivers were independent contractors and, accordingly, excluded from organizing a union.

The NRLB concluded the drivers were independent contractors by considering, among other factors, how they were compensated, their lack of supervision, the fact that they leased or owned their work vans, and because the drivers’ “nearly unfettered control” over their daily work schedules and working conditions provided them with significant entrepreneurial opportunity for economic gain.

Board Chairman John Ring, and Members William Emanuel and Marvin Kaplan, all Republican appointees, comprised the majority. Democratic appointee Lauren McFerran dissented.

Bottom Line

Friday’s decision applies only in circumstances where workers classified as independent contractors are seeking to organize a union. However, the NLRB’s test for determining employee status is just one of several Obama-era standards that the NLRB is reconsidering, and we could see a number of other important changes in the coming months.