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NLRB Overturns Obama-era Independent Contractor Standard

Feb 25, 2019
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The National Labor Relations Board’s (the “Board”) recent ruling in SuperShuttle DFW, Inc. overturned Obama-era precedent and declared the Board’s return to its long-standing independent-contractor standard. In doing so, the Board provided a benefit to employers seeking to utilize contract labor, who are not employees and who do not have the right to unionize.

The standard outlined in SuperShuttle to determine whether an individual is an independent contractor returns the focus of the analysis on a worker’s “entrepreneurial opportunity” for economic gain, which had been severely limited by the 2014 FedEx Home Delivery ruling. The FedEx Board felt entrepreneurial opportunity could be applied too broadly to workers, resulting in many being classified as independent contractors unable to unionize. To combat this, the FedEx Board limited the role of entrepreneurial opportunity in the independent contractor analysis.

The SuperShuttle Board overruled FedEx and reemphasized the role entrepreneurial opportunity plays in the independent contractor analysis. The case involved shuttle van drivers at the Dallas-Fort Worth airport who wanted to be considered employees. The shuttle van drivers were operating as independent businesses under a franchise model with the SuperShuttle brand. The Board re-evaluated the significance of entrepreneurial opportunity, stating the traditional common law factors governing independent contractor arrangements should be evaluated through the “prism of entrepreneurial opportunity,” when appropriate given the facts of the case. “Where a qualitative evaluation of common law factors shows significant opportunity for economic gain (and…significant risk of loss), the Board is likely to find an independent contractor [relationship].”

The Board found the fact that the individuals leased or owned their work vans, the method by which they were compensated, and the individuals’ control over their daily work schedules and working conditions were all factors that provided the franchisees with “significant entrepreneurial opportunity for economic gain.” The renewed emphasis on the entrepreneurial opportunity component, along with the absence of supervision by SuperShuttle, and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s decision that the franchisees were independent contractors.

The SuperShuttle decision effectively expands the definition of “independent contractor” under the National Labor Relations Act (“NLRA”), which is significant when determining whether the workers have the right to unionize under the NLRA. With employers more easily able to classify individuals as independent contractors rather than employees, employers will be better able to avoid union organizing efforts and charges of unfair labor practices under the NLRA. It is important to note, however, that the SuperShuttle decision applies only to the NLRA; the analysis to determine whether a worker is an employee or independent contractor under other laws, such as the Fair Labor Standards Act, ERISA and the Internal Revenue Code, must still be considered before classifying a worker as an independent contractor.

If you have any questions regarding independent contractors, please feel free to contact Jim Wilkins, Katie Basch, or any other K|W|W attorney.