25 Feb NLRB Returns to Employer-Friendly Approach in its Independent Contractor Analysis
Written by: Allison Averbuch, Esq.
In January, the National Labor Relations Board (NLRB), in SuperShuttle DFW, Inc., walked back Obama-era collective-bargaining decisions. Overruling NLRB precedent established during the Obama administration, the SuperShuttle decision marks a return to the common-law agency test for determining whether workers are independent contractors or employees. If workers are considered independent contractors, then the collective bargaining and organizing rights available to employees under the National Labor Relations Act (NLRA) are unavailable to them.
In SuperShuttle, shuttle drivers at Dallas-Fort Worth Airport had franchise agreements with SuperShuttle DFW, Inc., under which SuperShuttle provided dispatch and branding services to independent drivers/franchisees. The drivers owned their shuttle vehicles and paid their on-the-job expenses. Still, the shuttle drivers were subject to strict vehicle specifications, dress codes, and performance requirements. The NLRB found that the franchisees had “significant entrepreneurial opportunity for economic gain” because they leased or owned their work vehicles, “their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions.” (NLRB Press Release, “NLRB Returns to Long-Standing Independent-Contractor Standard, available at https://www.nlrb.gov/news-outreach/news-story/nlrb-returns-long-standing-independent-contractor-standard). These factors, the NLRB decided, “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 are not employees under the [NLRA].” (NLRB Press Release).
In reaching the conclusion that the shuttle drivers were not employees for purposes of the NLRA, the NLRB decided that its Obama-era predecessors had placed too much emphasis on the “entrepreneurial opportunity” factor, which improperly shifted the independent contractor determination away from the traditional common-law agency analysis. Instead of heavily examining a worker’s entrepreneurial opportunity, the Board focused on the shuttle driver’s ability to unanimously set his or her own schedule. According to the Board,
[f]ranchisees have total autonomy to set their own work schedule. They merely turn on their Nextel device and wait for the next bid offer. Once a trip is offered, franchisees, except in very limited circumstances, can decide whether to accept the trip or not. Further, when a franchisee wishes to take a break or end the work day, he merely turns off his Nextel device.
(SuperShuttle at 12).
Under this decision, employers will more easily be able to create a distinction between employees and independent contractors, even when a company exerts significant control over the way independent contractors perform their job duties. It will also likely provide a boost for companies in the so-called “Gig Economy” or “On Demand Economy” (think Uber, Lyft, AirBnB, Postmates, Task Rabbit, to name a few), whose business models rely on independent contractors who use their own tools to provide services to customers.