The National Labor Relations Board on Jan. 25 reversed an Obama-era decision and returned to its previously longstanding independent contractor standard, giving greater weight to the role entrepreneurial opportunity for financial gain plays in determining whether an individual is an employee or an independent contractor.
Applying its clarified standard, the board concluded that the franchisees are not statutory employees under the National Labor Relations Act, but rather independent contractors, which means they're excluded from coverage under the NLRA.
That's significant because the NLRA guarantees the right of employees to organize, to join or form a labor organization, to bargain collectively with their employer through a chosen representative, or to refrain from such activity.
It also protects the right of employees to engage in concerted activities for mutual aid and protection, and its coverage therefore can extend to non-union employers and to employee conduct that is not expressly union-related.
Key Factors in the Decision
The NLRB found that the SuperShuttle franchisees' leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain.
These factors, 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.
The Jan. 25 decision overrules FedEx Home Delivery, a 2014 NLRB ruling that modified the applicable test for determining independent-contractor status by severely limiting the significance of a worker's entrepreneurial opportunity for economic gain.
While the latest decision is a win for business, legal experts caution employers that the ruling is relatively narrow in scope, applying only to the National Labor Relations Act, not to myriad other laws—for example, the Fair Labor Standards Act and various state laws—that also can have a bearing on determinations of independent contractor versus employee status.
Get the latest information on HR-related regulatory developments at CBIA's 2019 Human Resources Conference, March 21 from 8:30 am to 4:15 pm at the Red Lion Hotel in Cromwell.