National Labor Relations Board Issues Decision Overruling Obama-Era Independent Contractor Test: What This Means For (Putative) Employers

In a business-friendly decision issued on January 25, 2019, the National Labor Relations Board ("NLRB" or "Board") revised its test for determining whether putative independent contractors are exempt from coverage under the National Labor Relations Act ("NLRA"). See SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) ("SuperShuttle"). The Board's SuperShuttle decision affirmed a 2010 Acting Regional Director's decision that a group of franchisee airport shuttle operators were independent contractors. In the process, the Board overturned FedEx Home Delivery, 361 NLRB 610 (2014) ("FedEx"), an Obama-era decision that, according to the SuperShuttle Board, "significantly limited the importance of entrepreneurial opportunity" to the NLRB's independent contractor test. Given this new development, employers should expect that, at least under the NLRA, it will be easier than before to show that a worker should be classified as an independent contractor (instead of an employee).

The Common-Law Independent Contractor Test

By way of background, Section 2(3) of the NLRA excludes independent contractors from statutory coverage, and the Board has traditionally used the common-law agency test to determine whether an individual is an employee or independent contractor. The non-exhaustive list of ten factors—none of which is determinative—include:

(a) The extent of control which, by the agreement, the master may exercise over the details of the work;

(b) Whether or not the one employed is engaged in a distinct occupation or business;

(c) 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;

(d) The skill required in the particular occupation;

(e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f) The length of time for which the person is employed;

(g) The method of payment, whether by the time or by the job;

(h) Whether or not the work is part of the regular business of the employer;

(i) Whether or not the parties believe they are creating the relation of master and servant; and

(j) Whether the principal is or is not in business.

The Board's 2014 FedEx Decision

In FedEx, the Board announced a "refinement" to its independent contractor test by rejecting the D.C. Circuit's instruction in a related 2009 decision1 that whether the individual has significant entrepreneurial...