NLRB Returns to Longstanding Independent Contractor Standard

February 06, 2019
Publication
Inside HR
Employee & Labor Relations

On January 25, 2019, the National Labor Relations Board (NLRB) returned to its longstanding independent-contractor standard in a case involving shuttle-van-driver franchisees of SuperShuttle. The Board concluded that the franchisees are not employees under the National Labor Relations Act (NLRA), but rather independent contractors excluded from the Act’s coverage. In doing so, the Board clarified the role entrepreneurial opportunity plays in its determination of independent-contractor status.

Background

The Board reaffirmed its application of the traditional “common-law principles” for determining whether an individual is a “statutory employee” or an “independent contractor.” The common law principles are:

  • The extent of control which, by the agreement, the master may exercise over the details of the work.
  • Whether the one employed is engaged in a distinct occupation or business.
  • 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.
  • The skill required in the particular occupation.
  • Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
  • The length of time the person is employed.
  • The method of payment, whether by the time or by the job.
  • Whether the work is part of the regular business of the employer.
  • Whether the parties believe they are creating the relation of master and servant.
  • Whether the principal is or is not in business.

Key Takeaways

This decision overrules FedEx Home Delivery, a 2014 NLRB decision that modified the applicable test for determining independent-contractor status by severely limiting the significance of a worker’s entrepreneurial opportunity for economic gain.

Applying its newly restored independent-contractor test to the case at hand, the Board held the SuperShuttle franchisees were independent contractors. Specifically, “the Board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain,” according to a NLRB statement. 

These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s finding that the franchisees demonstrate significant entrepreneurial opportunity and control and are, therefore, not employees under the Act. Workers who are defined as independent contractors are expressly excluded from the provisions of the NLRA.  

Source: Michael Hyatt, Director, HR Government Affairs, MRA – The Management Association; NLRB.gov, CCH/Wolters Kluwer