NLRB Is Looking to Review (Again) Independent Contractors And Who is Covered
The National Labor Relations Board (“NLRB” or “Board”) recently indicated an openness to revisiting the independent contractor standard employed by the Board when assessing whether individuals are covered under the National Labor Relations Act (“Act”).
Section 2(3) of the Act defines “Employee” and specifically excludes individuals having the status of an independent contractor from being an Employee within the meaning of the Act. The practical effect of this is an employer who employs independent contractors rather than “Employees” does not fall under the jurisdiction of the NLRB with respect to the independent contractors.
The Board applies common law agency principles when determining whether individuals are independent contractors and thus excluded from coverage of the Act. This framework has held true ever since the Supreme Court issued its decision in NLRB v. United Insurance Co. of America, 390 U.S. 254, 256 (1968). However, since the United Insurance decision, the Board has at times revisited the common-law factors to the independent contractor analysis and appears to be poised to do so yet again.
On December 27, 2021, the Board issued a Notice and Invitation to File Briefs in The Atlanta Opera, Inc., 371 NLRB No. 45 (2021). In doing so, the Board specifically asked interested amici to submit briefs addressing whether the Board should continue to apply the current independent contractor standard as was set forth in SuperShuttle DFW, Inc., 367 NLRB No. 75. (2019). The Board also invited interested amici to address whether the Board should instead apply a prior independent contractor standard, either in its entirety or with modifications, as was set forth in FedEx Home Delivery, 361 NLRB 610 (2014). Forty-two amicus briefs were filed with the NLRB in response to its December 27, 2021 invitation. The amicus briefs presented a variety of arguments to the Board ranging from returning to FedEx Home Delivery, not departing from SuperShuttle DFW, or abandoning the Restatement (Second) of Agency entirely and adopting a wholly new independent contractor standard. The United States Department of Justice submitted an amicus brief on behalf of neither party about the potential antitrust implications of the Board employing a too narrow statutory definition of Employee under the Act, whether coming from independent contractors trying to unionize or businesses misclassifying their workers as independent contractors to gain a competitive advantage over rivals.
While the Board has consistently applied the traditional non-exhaustive list of factors identified in the Restatement (Second) of Agency as the crux of its independent contractor analysis, the current dispute revolves around the significance that should be given to a putative independent contractor’s entrepreneurial opportunity for gain or loss. Though this is not included as a factor in the Restatement (Second) of Agency, it is something the Board has traditionally considered when assessing independent contractor status and the Board lent greater weight to entrepreneurial opportunity in SuperShuttle DFW than it did in FedEx Home Delivery, with the effect being more workers classified as independent contractors as opposed to Employees under the Act.
Based on its December 27, 2021 invitation to file briefs, it seems most likely the Board intends on returning to its standard in FedEx Home Delivery, either in its entirety or with some modifications. However given the significant number of filed amicus briefs arguing for a wide variety of outcomes, including the Department of Justice’s stated concerns about the antitrust implications, it is possible the Board will go beyond what it indicated in its December 27, 2021 invitation to file briefs.
A change in the Board’s independent contractor standard could have widespread implications for employers and otherwise for businesses which heretofore did not necessarily consider themselves to be employers. Businesses should closely monitor what the Board does in The Atlanta Opera and be prepared to respond accordingly.
Stephen P. Kopstein also contributed to this article.