Make a U-Turn Now: NLRB Re-Writes Independent Contractor Test
The National Labor Relations Board (NLRB) overturned yet another Obama-era precedent—the 2014 FedEx Home Delivery decision, which had severely limited the definition of an independent contractor under the National Labor Relations Act (NLRA).
In its new decision issued January 25, 2019, SuperShuttle DFW, Inc., the NLRB reversed course and expanded this classification, placing particular emphasis on a worker's "entrepreneurial opportunity" for financial gain. This decision empowers businesses—particularly those operating in what has become known as the "gig economy"—to classify more workers as independent contractors, rendering them ineligible to unionize or access the protections of the NLRA.
SuperShuttle DFW examined drivers who provide ride-sharing services to and from the Dallas/Fort Worth International Airport through SuperShuttle. The Amalgamated Transit Union sought to represent those drivers, and SuperShuttle resisted, arguing that the drivers were independent contractors and not employees.
The NLRB agreed and laid out the 10 common-law factors that determine whether a worker is an independent contractor or an employee:
- The extent of control which, by the agreement, the alleged employer may exercise over the details of the work;
- Whether the individual is engaged in a distinct occupation or business;
- The kind of occupation, referencing whether, in the locality, the work is usually done under the direction of an employer or by a specialist without supervision;
- The skill required in the particular occupation;
- Whether the alleged employer or the worker supplies the instrumentalities, tools, and the place of work;
- The length of time for which the individual is engaged;
- The method of payment, whether by the time or by the job;
- Whether the work is part of the regular business of the alleged employer;
- Whether the parties believe they are creating an employment relationship; and
- Whether the individual is or is not in business.
The NLRB then reasoned that "entrepreneurial opportunity, like employer control, is a key principle in evaluating the overall effect of the common-law factors on a putative contractor's independence to pursue economic gain." Thus, "entrepreneurial opportunity" necessarily overlays the entire analysis. In so holding, the NLRB criticized its FedEx opinion, finding that its analysis severely undervalued the importance of "entrepreneurial opportunity."
With this new test in mind, the NLRB turned to the facts of SuperShuttle's business. It noted that the SuperShuttle DFW drivers set their own schedules, selected their routes, and owned their vans. As such, the NLRB determined this general lack of supervision and existence of driver control meant that drivers were independent contractors, not employees.
Need assistance in determining how to best classify your employees under the NLRA? Struggling to keep straight all the different independent contractor tests under various labor and employment laws? Ballard Spahr's Labor and Employment Group routinely assists employers in ensuring compliance with state, federal, and local statutes and regulations.
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