Back to the Future (Again): NLRB Returns to Traditional Independent Contractor Test
On January 25, 2019, the National Labor Relations Board (“NLRB” or “Board”) in SuperShuttle DFW, Inc. (367 NLRB No. 75), overruled the Obama-era 2014 FedEx Home Delivery (361 NLRB 610) decision and returned to its traditional common-law independent contractor test, one more aligned with the test utilized by other federal agencies and courts nationwide.
SuperShuttle arose when the Amalgamated Transit Union (“ATU” or “Union”) sought to represent franchisee drivers who worked for SuperShuttle Dallas Fort Worth (“DFW”). DFW contended the ATU could not represent the franchisee drivers because they were independent contractors, not employees, and thus were barred from unionizing pursuant to Section 2(3) of the National Labor Relations Act (“NLRA” or “Act”).
On August 16, 2010, the Board’s Region 16 Acting Regional Director issued a Decision and Order holding, based on the Board’s traditional common-law agency analysis, that the driver franchisees in the petitioned-for bargaining unit were independent contractors and, thus, not covered by the Act. Accordingly, the Acting Regional Director dismissed the representation petition. The union appealed the Acting Regional Director’s decision to the Board.
While the ATU’s appeal was pending, the Board issued its decision in FedEx, wherein the Board sought to “more clearly define the analytical significance of a putative independent contractor’s entrepreneurial opportunity for gain or loss.” Specifically, the FedEx Board held that entrepreneurial opportunity was but “one aspect of a relevant factor that asks whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business.”
Thereafter, the Board, now a Republican-majority, rendered its SuperShuttle decision, overruling FedEx. The SuperShuttle Board explained the FedEx Board “impermissibly altered” the NLRB’s common-law agency analysis, overruled FedEx’s pronounced test, and returned to the “traditional common-law test that the Board applied prior to FedEx (and that the Acting Regional Director applied” in the case below). Stated another way, the SuperShuttle Board held “entrepreneurial opportunity” is but one of several principles by which to evaluate a given worker’s employment relationship with the employer as part of a broader analysis, and should not be the “overriding factor” when analyzing the employment relationship.
The Board then applied its common-law agency analysis to the franchisee drivers and affirmed the Acting Regional Director’s decision. In pertinent part, the Board held the franchisee drivers were “free from control by” DFW regarding most aspects of their work and could set their own schedules, decide whether to accept dispatch requests, and set their own routes. Further, the franchisee drivers were required to purchase and supply their own vehicles, could accept tips (which they need not share with other franchisees or DFW), and were not supervised “in any meaningful way.” Thus, the franchisee drivers were properly held to be independent contractors and were not subject to the Act.
The Board’s return to its traditional independent contractor analysis should come as welcome news to employers. Moreover, the SuperShuttle decision clarifies the role “entrepreneurial opportunity” plays in the Board’s determination of independent-contractor status, and provides employers that make use of contingent workforces or franchisees with greater certainty regarding the employment status of their workforces.