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NLRB Overturns Independent Contractor Test

As Published in the February, 2019 Issue of the PELRAS Newsletter

Published on: Mon 11th Feb, 2019 By: Brad J. Betack

In a recent decision, the National Labor Relations Board (“NLRB”) made it easier for employers to consider certain workers to be independent contractor, and thereby preventing those workers from unionizing or accessing other protections provided by the National Labor Relations Act (“NLRA”).
The January 25, 2019 decision, Supershuttle DFW, Inc., overturned Obama-era precedent, which sought to put the primary emphasis on whether workers were “economically dependent” on the organization.  The Obama-era precedent greatly narrowed the number of workers who could be classified as independent contractors, directly resulting in the dramatic increase of the number of individuals eligible to unionize throughout the country.
Supershuttle DFW examined drivers who provided ride-sharing services to and from the Dallas/Fort Worth International Airport through Supershuttle.  A bargaining unit sought to represent the drivers.  Supershuttle objected, and argued that the drivers were not employees, but rather independent contractors.  
The NLRB agreed and in a 3-1 decision, outlined 10 common law factors that determine whether a worker is an independent contractor or employee:
1. The extent of control which, by the agreement, the alleged employer may exercise over the details of the work;
2. Whether the individual is engaged in a distinct occupation or business;
3. The kind of occupations, referencing whether, in the locality, the work is usually done under the direction of an employer or by a specialist without supervision;
4. The skill required in the occupation;
5. Whether the alleged employer or the worker supplies the instrumentalities, tools, and the place of work;
6. The length of time for which the individual is engaged;
7. The method of payment;
8. Whether the work is part of the regular business of the alleged employer;
9. Whether the parties believe they are creating an employment relationship;
10. Whether the individual is or is not in business.
In the majority opinion, the NLRB placed particular emphasis on a worker’s “entrepreneurial opportunity” for financial gain to properly classify a worker as an independent contractor or employee, reasoning that “entrepreneurial opportunity, like employer control, is a key principle in evaluating the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.”  The opinion rejected the prior Obama-era ruling that had shifted the independent contractor test away from the traditional common law factors to one of “economic dependence.”  
The Supershuttle DFW is a victory for employers who seek to use contract labor and will strengthen an employer’s ability to fight off unionization from workers who fall in the gray area of independent contractor/employee status.