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Misclassification of Independent Contractor is Violation of NLRA, ALJ Rules

The misclassification of an independent contractor is an unfair labor practice under the NLRA, according to Administrative Law Judge Dickie Montemayor. Intermodal Bridge Transp., No. 21-CA-157647 (Nov. 28, 2017).

ALJ Montemayor said that, because such misclassification chills future concerted activity and necessarily “deprives and conceals available protections” afforded to employees under the NLRA, misclassification in and of itself is a violation of the Act.

Background

Intermodal Bridge Transportation (IBT) used independent contractor drivers to move shipping containers between customer locations in the Los Angeles area to ports and rail hubs. The drivers leased their trucks from IBT and operated under IBT’s operating authority. Further, drivers were subject to IBT policies, were required to sign a variety of forms, had no control over their customers, and did not negotiate their pay rates. Although drivers could choose which days to work and their start time, they could not choose their shifts. Drivers paid certain costs to IBT and received payment for each container they moved.

The NLRB General Counsel issued a complaint following an organizing campaign by the International Brotherhood of Teamsters alleging violations of the NLRA. All of the GC’s allegations depended on whether the drivers were statutory employees protected by the Act.

ALJ’s Decision

Relying on the Board’s ruling in FedEx, 361 NLRB No. 55 (2014), the ALJ concluded that, under common law agency principles, drivers were misclassified as independent contractors and decided they  actually were employees covered by the Act.

The ALJ then considered whether the misclassification was a mechanism that only triggers the applicability and protections of the Act or whether the misclassification itself can constitute a violation.

Despite noting the lack of decisional authority supporting the GC’s argument that misclassification is a per se violation of the Act, the ALJ agreed that certain conduct can chill future Section 7 activity or can be used as a “preemptive strike” to prevent employees from engaging in protected concerted activity. According to the ALJ, “[F]rom a practical standpoint, misclassification not only serves to chill future concerted activity but deprives and conceals available protections these employees have under the Act.” Further, because interference and restraint of Section 7 rights flows directly from misclassification, the ALJ explained, the misclassification itself rises to the level of a per se violation of Section 8(a)(1).

The ALJ directed IBT to cease and desist from misclassifying its employees and make employees whole for any losses of earnings and other benefits, including reimbursing employees for consequential harm as a result of the misclassification.

Lesson

If the ALJ’s ruling is appealed by the employer, it is uncertain what action and position the GC will take and how the Board will rule. On December 1, the new General Counsel issued a Mandatory Submissions to Advice memo  in which he withdrew an initiative of his predecessor to argue to the NLRB that an employer’s misclassification of employees as independent contractors in and of itself violates Section 8(a)(1) of the NLRA. In light of the memorandum, if Intermodal appeals the ALJ’s ruling to the Board, the new GC could side with the employer.

Despite this uncertainty, misclassification is a minefield for employers. No matter what happens with this case, employers should review their practices for classifying workers.

Jackson Lewis P.C. © 2020National Law Review, Volume VII, Number 346
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April Upchurch Fredrickson, Employer legal advisor, Jackson Lewis, disability accommodation lawyer
Associate

April Upchurch Fredrickson is an Associate in the Portland, Oregon, office of Jackson Lewis P.C. Ms. Upchurch Fredrickson advises employers on a variety of issues including employee discipline and termination, employment discrimination, state and federal leave laws, disability accommodation, wage and hour compliance, employment policies and practices, and non-compete agreements.

In dealing with her clients, Ms. Upchurch Fredrickson emphasizes the importance of preventive counseling to minimize the risk of costly litigation...

503-345-4153
Howard Bloom, Jackson Lewis, labor union attorney, unfair practice investigations lawyer, employment legal counsel, bargaining law
Principal

Howard M. Bloom is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He has practiced labor and employment law representing exclusively employers for more than 36 years.

Mr. Bloom counsels clients in a variety of industries on labor law issues. He trains and advises executives, managers and supervisors on union awareness and positive employee relations, and assists employers in connection with union card-signing efforts, traditional union representation and corporate campaigns, and union decertification campaigns. He also represents clients at the National Labor Relations Board in connection with bargaining unit issues, objections and challenges, as well as unfair labor practice investigations and trials. Mr. Bloom also has been the spokesperson at countless first and successor contract collective bargaining negotiations, and regularly advises on collective bargaining agreement administration issues, including grievance/arbitration issues.

Mr. Bloom has appeared before the Massachusetts Supreme Judicial Court, the U.S. Court of Appeals for the District of Columbia, several U.S. District Courts, the National Labor Relations Board, the Massachusetts Labor Relations Commission, the Equal Employment Opportunity Commission and the Massachusetts Commission Against Discrimination.

617-367-0025
Philip B. Rosen Jackson Lewis  Preventive Practices Lawyer & Collective Bargaining Attorney
Principal

Philip B. Rosen is a Principal in the New York City, New York, office of Jackson Lewis P.C. He is a member of the firm's Board of Directors and co-leads the firm's Labor and Preventive Practices Group. He joined the firm in 1979 and served as Managing Partner of the New York City office from 1989 to 2009.

Mr. Rosen lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media, reorganizations and reductions-...

212-545-4000
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