NLRB Changes Independent Contractor Standard
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APPLIES TO All Employers with Employees Subject to the NLRA |
EFFECTIVE June 13, 2023
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QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
in The Atlanta Opera, Inc., the National Labor Relations Board (NLRB) returned to the 2014 FedEx Home Delivery (FedEx II) standard for determining independent contractor status under the National Labor Relations Act (NLRA), and overruled SuperShuttle (2019). SuperShuttle said that entrepreneurial opportunity for gain or loss should be the “animating principle” of the independent-contractor test. Atlanta Opera returned to the view that “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” While entrepreneurial opportunity is a consideration, the NLRB asked whether the evidence tends to show that a supposed independent contractor is, in fact, rendering services as part of an independent business.
As part of the independent contractor analysis under FedEx II, the NLRB said it would consider whether the contractor (a) has a significant entrepreneurial opportunity; (b) has a realistic ability to work for other companies; (c) has proprietary or ownership interest in their work; and (d) has control over important business decisions. As part of the analysis, the NLRB considered evidence of whether the employer imposed constraints on the individual’s ability to render services as part of an independent business, such as limitations placed by the employer on the individual’s realistic ability to work for other companies and restrictions on the individual’s control over important business decisions. The NLRB also considered whether the terms or conditions under which the individuals operate are “promulgated and changed unilaterally by the company.”
Here, the NLRB found that the makeup artists, wig artists, and hairstylists who work at the Atlanta Opera are not independent contractors, but instead are covered employees. Specifically, the evidence did not show that the stylists rendered services as part of their own independent businesses. Rather, the majority of the traditional common-law factors pointed toward employee status. The employer exercised substantial control over the essential details of stylists’ day-to-day work by controlling the work done and the stylists’ schedules, including availability of breaks and overtime. Ultimately, the stylists were fully integrated into the employer’s company and productions, did not display any signifiers of engaging in an independent business, and worked in tandem with the employer’s other departments.
Action Items
- Review the NLRB’s decision here.
- Have independent contractor relationships reviewed by legal counsel for compliance.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
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