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NLRB Issues Decision Modifying Independent Contractor Standard

The National Labor Relations Board (the Board) has issued a decision that reverts to its pre-2014 standard for determining whether a worker is an employee or an independent contractor.

The National Labor Relations Act (the Act) covers employees but not independent contractors.  As a result, employees can unionize but independent contractors cannot. 

In 2014, the Board issued a decision in FedEx Home Delivery that reduced the significance of “entrepreneurial opportunity” in determining whether a worker was an employee or an independent contractor.  In FedEx the Board wrote, “In our view, the Board should give weight to actual, but not merely theoretical, entrepreneurial opportunity, and it should necessarily evaluate the constraints imposed by a company on the individual’s ability to pursue this opportunity. … [T]he Board should evaluate—in the context of weighing all relevant common-law factors—whether the evidence tends to show that the putative independent contractor is, in fact, rendering services as part of an independent business.”

On Friday, January 25th, the Board overruled its 2014 FedEx decision in SuperShuttle DFW, Inc. and wrote, “the FedEx Board impermissibly altered the common-law test and longstanding precedent, and to the extent the FedEx decision revised or altered the Board’s independent-contractor test, we overrule it and return to the traditional common-law test that the Board applied prior to FedEx.”

The result of SuperShuttle DFW, Inc. is a return to the pre-2014 independent contractor standard under which it is easier for workers to be classified as independent contractors who are ineligible to unionize under the National Labor Relations Act.

Readers should note that the SuperShuttle decision only impacts matters before the Board and does not impact employee vs. independent contractor determinations in other forums.  The NLRB’s related press release is available here.