NLRB Reinstates Prior Independent Contractor Standard
Continuing its trend of reversing course on positions slanted toward unions and employees asserted during the Obama Administration, the National Labor Relations Board has now returned to its prior, long-standing independent contractor standard.
For decades, the Board had relied on a common-law test to determine whether an individual is an employee, who is subject to the National Labor Relations Act, or an independent contractor, who is not. Under this test, a number of factors are evaluated:
- Extent of control by the employer, with greater control over the manner and means by which the individual does business indicating employee status
- Method of payment, as employers do not typically share the opportunity for profit or loss with independent contractors
- Instrumentalities, tools, and place of work, as those are typically provided by employers to employees but not to independent contractors
- Supervision, as independent contractors are not generally supervised
- The relationship the parties believed they created
- Engagement in a distinct business/work as part of the employer’s regular business/the principal’s business, since the more integrated the worker’s services are into the employer’s business, the more likely the worker is an employee
- Length of employment, with a longer relationship indicating employee status
- Skills required, with specialized skills or training indicating independent contractor status
“An important animating principle” under which the factors are evaluated is “whether the position presents the opportunities and risks inherent in entrepreneurism.” In the 2014 case of FedEx Home Delivery, however, the Board revamped its independent contractor analysis and severely limited the significance of a worker’s entrepreneurial opportunity.
Now, in SuperShuttle DFW, Inc., the Board has reaffirmed the importance of the role of entrepreneurial opportunity in the determination of independent contractor status. As the Board notes, those factors that support a worker’s entrepreneurial opportunity indicate independent contractor status, while those that support employer control indicate employee status. In the present case, the Board applied the factors to determine that franchisees operating airport shuttle vans are independent contractors: they own and control the vans; they control their daily work schedules and working conditions; they pay a monthly fee but do not share fares with the business; the parties’ agreement clearly provides that franchisees are independent operators; there is little control over the means and manner of franchisees’ performance; and there is no supervision of franchisees.
The FedEx Home Delivery case was viewed with great concern by employers, as it made it much more difficult to establish independent contractor status. This ruling will make it easier, once again, to establish that status.