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NLRB Restores Independent Contractor Analysis

This past Friday, the National Labor Relations Board, in 3-1 decision, revitalized the importance of “entrepreneurial opportunity” in the analysis of whether a worker is an employee or independent contractor for purposes of the National Labor Relations Act (NLRA).  SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019).  The distinction between employee and independent contractor status is important, because the former is protected by the NLRA while the latter is not.

In SuperShuttle, the Board overturned the decision by the Obama-NLRB in FedEx Home Delivery, 361 NLRB 610 (2014) (FedEx), enf. denied 849 F.3d 1123 (D.C. Cir. 2017) (FedEx II).  In FedEx, the Board stated that entrepreneurial opportunity is “one aspect of a relevant factor that asks whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business.”  (emphasis in FedEx).  The SuperShuttle Board remarked that this view “limit[s] the importance of entrepreneurial opportunity.”

The Board revisited the issue in SuperShuttle to address “whether franchisees who operate shared-ride vans for SuperShuttle Dallas-Fort Worth are employees covered under Section 2(3) of the National Labor Relations Act or independent contractors and therefore excluded from coverage.”  In concluding that the franchisees are independent contractors, the Board explained that the appropriate way to answer this question is through the common law independent contractor test in place prior to FedEx.  The Board will consider a number of factors to determine whether a worker is an employee or independent contractor.  The non-exhaustive list includes:

  1. The extent of control which, by the agreement, the master may exercise over the details of the work.
  2. Whether or not the one employed is engaged in a distinct occupation or business.
  3. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
  4. The skill required in the particular occupation.
  5. Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
  6. The length of time for which the person is employed.
  7. The method of payment, whether by the time or by the job.
  8. Whether or not the work is part of the regular business of the employer.
  9. Whether or not the parties believe they are creating the relation of master and servant.
  10. Whether the principal is or is not in business.

Whether the worker has entrepreneurial opportunity informs consideration of the individual factors.  In a critique of FedEx, the Board stated that the “decision in FedEx did far more than merely ‘refine’ the common-law independent contractor test–it ‘fundamentally shifted the independent contractor analysis, for implicit policy-based reasons, to one of economic realities, i.e., a test that greatly diminishes the significance of entrepreneurial opportunity and selectively overemphasizes the significance of ‘right to control’ factors relevant to perceived economic dependency.”  FedEx 361 NLRB at 629.  The prior Board’s error was to limit consideration of entrepreneurial opportunity to just one factor.

Applying the common law factors in SuperShuttle, the Board concluded that the franchisees were independent contractors.  The workers leased or owned their own work vehicles, were paid on a per fare basis, and maintained “nearly unfettered opportunity to meet and exceed their weekly overhead.“  The franchisees have significant opportunity for economic gain and significant risk of loss supported the conclusion that they are independent-contractors.

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