NLRB Changes Independent Contractor Test Again
All Employers Subject to the NLRA
January 25, 2019
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The National Labor Relations Board (NLRB) recently issued a board decision in SuperShuttle DFW, Inc., stating a return to the common law “entrepreneurial opportunity” analysis for independent contractors and rejecting the previous FedEx Home Delivery “economic realities” test. The common law analysis looks at a variety of factors, with no one factor being decisive: (1) extent of control, (2) engagement in a distinct occupation or business, (3) whether the work in is usually done with or without supervision from the employer, (4) skill required, (5) who supplies the tools and place of work, (6) length of time employed, (7) payment by time or by job, (8) whether the work is part of the regular business of the employer, (9) whether there is a “master and servant” relationship, and (10) whether the worker is or is not in business.
The previous FedEx decision added a new factor to the test – “rendering services as part of an independent business” – with a focus on control over business decisions, ownership interest in the work, and an ability to work for other companies. The SuperShuttle decision stated that “entrepreneurial opportunity” is not merely an individual factor in the test, but rather a “principle to help evaluate the overall significance” of the factors.
The shift in the test is largely due to the shift in members of the NLRB, and will no doubt continue to change as administrations change. Notwithstanding this recent shift at the NLRB, employers must continue to review independent contractor status under all applicable standards (e.g., IRS, Department of Labor, state common law and/or statutory tests, etc.) to minimize potential liability for misclassification.
- Read the SuperShuttle decision here.
- Have independent contractor classifications reviewed by legal counsel.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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