The NLRB’s Newest Take on Who Is an Employee under the National Labor Relations Act

On January 25, 2019, the National Labor Relations Board (“NLRB”) issued an important  decision in SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338, 367 NLRB No. 75, Case 16-RC-010963 (Jan. 25, 2019), holding 3-1 that franchisee drivers who operated shared ride vans were independent contractors, not employees, under the National Labor Relations Act (“NLRA”). In SuperShuttle, the Board found that the franchisee drivers were required to purchase or lease a van and enter into a franchise agreement with strong indemnification provisions in favor of the operator. The drivers also had total control over their work schedules, determining how much or how little to work, and had discretion on what trips to accept. According to the Board, these factors demonstrated a significant opportunity for economic gain, as well as a significant risk of loss.

In reaching its decision, the Board emphasized that all common law factors must be considered in evaluating whether an employment relationship exists, including entrepreneurial opportunity. Moreover, the Board may have gone a step further by stating that it “may evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate.” This emphasis on entrepreneurial opportunity steers away from the Board’s focus on economic dependency in the 2014 FedEx Home Delivery case, 361 NLRB No. 55 (Sept. 30, 2014).

Indeed, the NLRB (and the Court of Appeals for the D.C. Circuit that reviews its decisions) have grappled over the years with which factors, if any, should be given greater weight in determining whether an individual was properly classified as an employee under the NLRA (and thus entitled to all attendant rights, including the right to bargain) or an independent contractor. For a significant period of time, the central issue had been the employer’s control over the putative employee. According to the majority in FedEx, the issue was not whether the individuals in question — there, drivers for the Federal Express home delivery service — had the opportunity to control their schedules, their workload, and whether they could hire others to complete their assignments, but whether they actually availed themselves of those options. The SuperShuttle decision, on the other hand, centers on whether the individual in question had “significant entrepreneurial opportunity for economic gain.” In other words, the more an individual can control their opportunities to earn — e.g., control over hours worked, rates charged, delegation of tasks to others — the more likely that individual will be considered an independent contractor.  As a result, the majority in SuperShuttle dismissed the decision in FedEx as a failed attempt to “refine” the common-law independent contractor test.

The two different NLRB panels – the FedEx panel, the majority of which were Democrats appointed under the Obama administration and the SuperShuttle panel consisting of a Republican majority – clearly viewed the employee/independent contractor analysis very differently. Accordingly, the NLRB’s position on the distinction between “employee” and “independent contractor” is a moving target, and regardless of the factors used remains dependent upon the specific facts and circumstances of each individual scenario. We will continue to monitor the decisions of the NLRB, and any rulemaking that may be forthcoming to clarify the Board’s position, as we assess the long-term impact of this recent decision.

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About HR Headaches
HR Headaches is a blog for Human Resources professionals, business owners, and in-house counsel to get the latest news, analysis and tips in the area of labor and employment law. Every day there are new court decisions, agency interpretations, and regulations which affect the workplace, making it difficult, if not impossible, for many employers to keep current. HR Headaches is dedicated to providing information in a practical, no-nonsense manner to help employers avoid legal disputes and keep policies up to date.
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