Courts Likely Not To Accept New Independent Contractor Test From NLRB | Locke Lord LLP


Earlier this week, the National Labor Relations Board issued an order calling on the public to file briefs in a case involving the independent contractor status of workers providing makeup and hairstyling services to the Atlanta Opera House. This highly unusual decision by the NLRB was issued as part of a campaign to organize a union seeking to represent stylists. The NLRB majority, consisting of three Democratic Party nominees, called on the public to address three options the NLRB is considering: whether to “adhere to the independent contractor standard in SuperShuttle DFW, Inc.», A decision rendered in 2019 by the NLRB when a majority of three members of the board of directors were appointed by the Republican Party; “Back to the standard in FedEx home delivery,. . . either in its entirety or with modifications ”; or shape a new standard. FedEx was a decision made in 2014 by the NLRB when a majority of its members were appointed by President Obama. Despite the excitement over the NLRB’s recent invitation by those who have long sought to reduce reliance on independent contractors in the United States, and a counterpart concern by others fearing that it might spell the end for companies and workers choosing to work on an independent contractor basis, a return by the NLRB to its 2014 date FedEx the independent contractor status test is unlikely to survive appellate review.

The turbulent history of NLRB decisions regarding independent contractor status

The NLRB’s administrative ping-pong has not been well received by appellate courts when reviewing NLRB decisions, including those involving independent contractor status.

In 2009, the United States Court of Appeals for the DC Circuit reviewed an NLRB decision on the independent contractor status of delivery drivers providing services to FedEx Ground. The decision was made in the context of a organizing drive by a local Teamsters union. The DC Circuit concluded that, in law, the drivers were not employees but rather independent contractors under the common law agency test used to determine independent contractor status under the National Labor Relations Act. . The court noted that the decisions of the NLRB and on the application of the common law agency criterion had changed over time; at first the NLRB had focused on an ’employer’s right to exercise control’ over the performance of workers in their work, ‘but then emphasized that the workers in question’ have a significant entrepreneurial opportunity for gain or loss ”. FedEx Home Delivery c. NLRB, 563 F.3d 492 (DC Cir. 2009).

The court in 2009 FedEx Case examined a “non-exhaustive list of ten factors [set forth in the Restatement (Second) of Agency] to consider when deciding whether a worker is an independent contractor. He is watching[ed] to these factors through the prism of entrepreneurial opportunity for gain or loss “and concluded that” indices of independent entrepreneur status “clearly outweigh” the factors that would support employee status. ” NLRB did not ask the Supreme Court to review the 2009 ruling FedEx DC Circuit decision.

Despite the DC Circuit’s decision in 2009, FedEx Ground was the subject of another union organizing effort by a local Teamsters union seeking to represent a different group of drivers classified by the company as independent contractors. In a 2014 ruling on employee status versus independent contractor drivers, the NLRB expressly chose to ignore the 2009 DC Circuit ruling, stating that it “disagreed with [the D.C. Circuit’s] interpretation of the Act ”, then proceeded to apply its FedEx decision, even though that decision was overturned. Unsurprisingly, after examination by the DC circuit, it again inverted the NLRB to FedEx II.

As we noted in a blog post from March 7, 2017, the DC Circuit said, “It is as clear as it gets that ‘the same problem presented in a later case in the same court should lead to same result. ‘ “After stating that the NLRB was simply seeking to” overturn the decision of this court in FedEx I,“He remarked,” This case is the poster child of our Circuit Law doctrine, which guarantees stability, consistency and fairness in Circuit Law. “

NLRB’s SuperShuttle decision in 2019

In January 2019, the NLRB, then controlled by a majority of board members appointed by President Trump, released its Super shuttle decision formally annulling the 2014 Council decision FedEx decision involving independent contractor status that was decided by the NLRB during the Obama administration. In his 2019 Super shuttle decision, the NLRB reverted to the common law test for independent contractor status and gave great weight to the 2017 DC Circuit decision in FedEx II. NLRB member McFerran, appointed by President Obama, filed a 15-page dissent.

The 2019 Super shuttle decision was made within the framework of franchise law. Shuttle drivers owned and operated franchises and were treated by the franchisor as independent contractors. They were organized by a union which maintained that the drivers were employees under the national labor relations law.

Majority and dissenting opinions in the Super shuttle case spent a lot of time refuting each other’s arguments. But the actual conclusion of the NLRB decision is quite simple: based on the 1968 Supreme Court decision in NLRB v. United Insurance Co. of America, which adopted the criterion of independent contractor status set out in the 1958 edition of the Restatement (Second) of Agency, the majority of the Council declared that it would henceforth apply a “non-exhaustive” list of common law factors. The majority of Council cautioned, however, that these factors are not a “short formula” for determining independent contractor status; rather, “all the incidents of the relationship must be evaluated and weighed without any factor being decisive.” These factors will then be examined against the “total factual context” of the business and industry, and assessed “through the prism of the entrepreneurial opportunity”.

Those last two words were at the heart of a major backlash between majority and dissent. Majority Opinion stated that entrepreneurial opportunity is not a separate common law factor or “super-factor” as the Dissent claimed, while Dissent asserted that the Majority Opinion essentially made a difference. the entrepreneurial opportunity an “asset” for the independent entrepreneur. To analyse.

In our blog post from January 25, 2019, we noted that the majority of the NLRB considered eight common law factors, concluding that five favored independent contractor status, two favored employee status, and one was neutral. In dissent, Member McFerran challenged nearly every finding of the majority of the board.

Prognosis

Member McFerran is currently a member of the NLRB and is now its Chairman of the Board. His differing views in Super shuttle are likely to remain intact. If his Democrat-nominated colleagues in the current board majority follow suit, which is very likely, we expect the NLRB to officially overthrow Super shuttle and relaunch its 2014 decision by FedEx, perhaps with a twist or two that the majority can hope will avoid yet another DC circuit reversal.

For DC Circuit judges considering the NLRB’s next decision, the very question posed by the NLRB’s Dec. 27 order may itself create the impetus for a reversal. The Board order expressly states that an alternative is for the NLRB to revert to the independent contractor test set out in its 2014 decision in FedEx home delivery. This appears to run counter to the fairly strong rebuke of the DC Circuit for the Commission’s express refusal to follow the earlier DC Circuit decision, which the court had called “the star child of our law doctrine. circuit ”.

Take away food

As a starting point, however the NLRB decides, the decisions of the Board deal only with the criterion of independent contractor status under a single statute – the National Labor Relations Act. Such decisions do not apply at all to independent contractor status under the federal Fair Labor Standards Act (FLSA), which governs minimum wages and overtime; federal non-discrimination laws (such as Title VII, Americans with Disabilities Act, and Age Discrimination in Employment Act); and the Federal Pensions and Benefits Act (ERISA) – each of which has its own tests for independent entrepreneur status. Likewise, no NLRB ruling applies to state laws, including those relating to minimum wages and overtime, payment of wages, unemployment, and workers’ compensation.

Decisions involving the status of independent contractor are very dependent on the facts. Not all companies using an independent contractor or franchise business model would prevail, even under the 2019 NLRB ruling in Super shuttle, and not all of these companies would go bankrupt, even under the 2014 Board decision in FedEx. Even Member McFerran might well consider some workers to be independent contractors if facts and circumstances lead to that result.

So, perhaps the most significant finding is that companies using an independent contractor or franchise business model that wish to avoid a union campaign, regulatory process initiated by a federal or state body or tax agency, or a Class actions under federal or state law are expected to improve their level of compliance with independent contractors’ tests under all such laws. Many companies have chosen to use a process such as IC Diagnostics (TM), which is designed to minimize exposure to independent classification errors by restructuring, re-documenting and reimplementing relationships with independent contractors in a way personalized and sustainable. Using this type of process will maximize the likelihood that a business will be able to avoid a misclassification challenge from an independent contractor, or win if engaged.

[View source.]


Comments are closed.