By: Nicholas G. Bohatyritz
The National Labor Relations Board (“NLRB”) is reconsidering the standard it uses when determining whether workers are classified as independent contractors.[1] Under Section 2(3) of the National Labor Relations Act (“NLRA”), workers classified as independent contractors lack the acts protections such as the right to unionize.[2] Currently, the NLRB uses the common law agency test that originated in NLRB v. United Insurance Co. of America and modified in SuperShuttle DFW when making their determination on whether a worker qualifies for these protections as an employee.[3] However, in the pending case, The Atlantic Opera, Inc. the NLRB is allowing parties and interested amici to make their arguments in briefs on which standard the court should apply to workers moving forward.[4]
As of March 17, 2022, forty-two amicus briefs were filed with the NLRB for The American Opera, Inc. case.[5]These briefs advocated for either staying with the standard established in SuperShuttle DFW, returning to the standard set forth in FedEx Home Delivery, or adopting an entirely new standard.[6] Originally, under the FedEx Home Delivery standard, the court found entrepreneurial opportunity as merely one of many factors used in determining whether workers are employees.[7] Instead of this factor being dispositive, the court decided that they must look to a series of ten factors from the Restatement (Second) of Agency along with this eleventh factor of whether workers specifically have “significant entrepreneurial opportunity for gain or loss.”[8] After examining these factors, the court then must make a final determination on a worker’s employment status.[9] Accordingly, there is not a single factor that is determinative on its own.[10]
Unlike FedEx Home Delivery, the current standard of SuperShuttle DFW puts greater weight on the factor of entrepreneurial opportunity.[11] In this case, the court overrules FedEx Home Delivery by holding that that the test used in that case diminished the “significance of entrepreneurial opportunity” and overemphasizes factors that place significance on how much control an employer has over a worker.[12] In addition, the court found that the court tried to confine this factor to discovering whether an independent contractor is actually “rendering services as part of an independent business.”[13] In sum, court in SuperShuttle DFW found that entrepreneurial opportunity is a significant factor in the determination process and that the more discretion workers have in making their decisions then the more likely are acting as independent contractors.[14]
The NLRB in The Atlantic Opera, Inc. has an opportunity to reconsider the independent contractor standard and either maintain the SuperShuttle DFW standard, adopt the FedEx Home Delivery standard, or create a new standard.[15]Any change in the NLRB’s independent contractor status may implicate a change in which more workers are considered employees within the protection of the NLRA.[16] If the NLRB adopts the FedEx Home Delivery standard, more workers will be classified as employees with the protections provided under the NLRA.[17] It remains unclear how the NLRB will rule in The Atlantic Opera, Inc. but one thing is for certain; the independent contractor dilemma continues[18]
[1] See NLRB Invites Briefs Regarding Independent Contractor Standard, nat’l labor Relations Bd. (December 27, 2021), https://www.nlrb.gov/news-outreach/news-story/nlrb-invites-briefs-regarding-independent-contractor-standard (inviting briefs to be filed arguing for which standard should be used in the case of The American Opera, Inc.).
[2] See 29 U.S.C.S. § 152(3) (stating that those not classified as “employees” are not protected by the act).
[3] See NLRB v. United Insurance Co. of America, 390 U.S. 254, 257 (explaining that the court applies the common law agency test when determining the employment status of workers).
[4] NLRB, supra note 1.
[5] NLRB Is Looking to Review (Again) Independent Contractors And Who is Covered, the nat’l law review, https://www.natlawreview.com/article/nlrb-looking-to-review-again-independent-contractors-and-who-covered (March 17, 2022).
[6] Id.
[7] See FedEx Home Delivery, 361 N.L.R.B. 610, 610 (N.L.R.B. September 30, 2014) (finding that entrepreneurial opportunity should be a factor in the NLRB’s determination but only so far as the constraints “imposed by a company on the individual’s ability to pursue this opportunity”).
[8] See id. (explaining how the NLRB uses eleven factors when determining whether a worker is an employee under the NLRA’s protection or an independent contractor with no protection).
[9] See id. at 11 (explaining how more weight is given to a factor depending on the circumstances of a particular case).
[10] Id.
[11] NLRB, supra note 1.
[12] See SuperShuttle DFW, Inc., 2019 NLRB LEXIS 15, 34 (N.L.R.B. January 25, 2019) (informing how the test in FedEx Home Delivery determined that the more control that an employer has over a worker, the more likely that the worker is an employee) The court described this test as shifting the focus of the test to economic factors and away from any consideration of entrepreneurial opportunity. Id.; NLRB Rides the SuperShuttle Back to the Common-Law Test for Independent Contractors, obermayer, https://www.hrlegalist.com/2019/02/supershuttle-common-law-test-independent-contractors/#:~:text=On%20January%2025%2C%202019%2C%20the%20National%20Labor%20Relations,unionize%20under%20the%20National%20Labor%20Relations%20Act%20%28NLRA%29 (February 4, 2019).
[13] Id. at 36.
[14] Id. at 46.
[15] NLRB Is Looking to Review (Again) Independent Contractors And Who is Covered, the nat’l law review, https://www.natlawreview.com/article/nlrb-looking-to-review-again-independent-contractors-and-who-covered (March 17, 2022).
[16] Id.
[17] See generally id. (indicating that the NLRB has changed its standard before and there is no reason to believe that they will not again).
[18] See generally id. (explaining how both employers and employees have to prepare for how any change in the independent contractor standard may affect them).