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NLRB Brings Independent Contractor Analysis Back In Line With DOL

The National Labor Relations Board (NLRB) has just overruled a previous case that had expanded the definition of independent contractor for the purposes of the National Labor Relations Act. In its SuperShuttle DFW Inc. decision, the board has brought that definition into greater alignment with the definition used by other agencies such as the Department of Labor and the IRS.

In 2014, the NLRB seemingly rejected the traditional test determining whether a worker was legally an employee rather than an independent contractor. That test takes a number of factors into account to gauge the degree of control exercised by the company vs. the degree of independence claimed by the worker. Under the NLRB's 2014 test, however, workers were likely considered an employee if they were economically dependent on the company.

Should the NLRB's definition be the same as other agencies?

There may have been a good reason for the NLRB to define "employee" broadly. Under the NLRA, only employees are entitled to unionize or bring charges of unfair labor practices.

This is similar to their treatment under other laws, but some activities regulated by the NLRA, such as unionizing, are also guaranteed by the First Amendment's peaceful assembly clause. So, the NLRA's definition of employee might well be more expansive because constitutional rights shouldn't be limited merely in order to bring the NLRB's definition into alignment with other agencies' definitions.

That said, the traditional test for determining whether a worker is an independent contractor or an employee comes from the common law, which was brought to the U.S. from England. Therefore, there is a fair argument that the tests should not vary from agency to agency. Non-variance would also be more convenient for employers.

The NLRB's test now weighs the same factors as other agencies

In its recent decision, the board ruled that the 2014 test "did far more than merely refine the common-law independent contractor test--it fundamentally shifted the independent contractor analysis."

That analysis traditionally involves weighing various factors and making a determination based on the totality of the circumstances. Those factors typically include:

  • Whether the services rendered are integral to the company's business
  • How permanent the relationship is
  • How much the worker has invested in facilities and equipment
  • How much, and what type of control the company exercises
  • What opportunities for profit or loss the worker has
  • How much foresight, initiative or judgment the worker exercises
  • How much independent business organization and operation the worker undertakes

If your organization relies on independent contractors, have an experienced employment law attorney evaluate your hiring practices to ensure they are in compliance with state and federal law.

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