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The National Labor Relations Board (NLRB) Refines Test for Determining Independent Contractor Status Versus Employee Status

The National Labor Relations Board has published a decision (FedEx Home Delivery, 361 NLRB No. 55) holding FedEx delivery drivers to be employees under the National Labor Relations Act instead of independent contractors. This is in opposition to both arguments by FedEx and a ruling by the Court of Appeals for the District of Columbia in a related case involving FedEx drivers at a different facility.

In its September 30, 2014 decision, the NLRB clarified the test it will apply in future cases and specifically refused to adopt the reasoning of the Court of Appeals setting up a future battle at the United States Supreme Court. The proper classification of individuals as employees or independent contractors can be critically important for tax, benefits and other labor and employment purposes. The NLRB test articulated in the FedEx case reaffirms the totality of the circumstances approach the NLRB has historically used, but declined to find that “entrepreneurial opportunity” is always of primary importance.

Entrepreneurial opportunity has been defined as the opportunity for gain or loss in the business along with the ability to work for other companies, hire their own employees, and have a proprietary interest in their work.

While this issue seems destined for further litigation and argument in the courts and ultimately at the Supreme Court, it is a good reminder that proper classification of employees remains an important and sometimes difficult issue. Properly classifying an individual at hire is only the first step in the process and employers should regularly self-audit their classifications to ensure they remain proper.

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Daniel K. O'Toole, Litigation Attorney, Armstrong Teasdale Law Firm
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Dan O’Toole, a respected leader and trial strategist, heads Armstrong Teasdale’s Litigation practice group and is a key member of the firm’s executive and management committees.

In his practice, Dan defends employers against a broad range of complaints and threats of legal action involving workplace situations. Because of his background and achievements in employment and labor law, Dan has been recognized repeatedly by Chambers USA, The Best Lawyers in America, Super Lawyers and for the last several years was included as one of the “Top 50”...

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Michael Kass, Labor, Employment, Attorney, Armstrong Teasdale, law firm
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Michael Kass is chair of Armstrong Teasdale's Employment and Labor Law practice group and is a former co-chair of the firm's Non-Compete/Trade Secrets practice group. He guides organizations, from small closely-held businesses to Fortune 100 companies, through the complex issues faced when managing employees.

Michael defends employers and their managers in state and federal courts and before administrative agencies such as the Equal Employment Opportunity Commission, the Missouri Commission on Human Rights, the U.S. Department of Labor and the National Labor Relations Board. Such...

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Robert A Kaiser, Employment, Labor, Attorney, Armstrong Teasdale, Law firm
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Bob Kaiser is a member of the Employment and Labor practice group representing emerging and mature businesses in labor and personnel-related disputes. Because employment and labor laws and regulations continue to evolve, he deftly guides management in creating “fences” and boundaries to assess risks and decrease litigation.

A portion of Bob’s practice includes traditional labor law, a focus he has had for more than 25 years. For small- to mid-sized organizations, he handles labor union relations such as union avoidance, collective bargaining, elections, strikes, picketing and other...

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