Another front on the question of defining an independent contractor is opening up, this time at the National Labor Relations Board.
With so many venues battling over what constitutes an independent contractor, it can be difficult to keep track of who is doing what. Add the recent action by the NLRB to the list.
The NLRB, now dominated by Democrats and in charge of enforcing the laws under the National Labor Relations Act, is looking to revive an Obama-era standard for defining independent contractors. That standard is considered far more friendly to the idea that workers hired as ICs actually are performing their functions in such a way that they should be classified as employees.
While the case that has spurred the new NLRB action may have its origins in an artistic business, Michael Lotito, the co-chair of the Workplace Policy Institute at the law firm of Littler Mendolson, sees the outcome of the latest development as having the potential for a larger impact. If the decision goes the way that the majority of the NLRB wants it to, “that is going to give the board tremendous opportunities to engage with respect to the trucking situation, the gig economy and all sorts of other situations,” Lotito said.
At issue are two legal cases that involved an NLRB decision. One goes back to 2009 and 2014 in connection with a unionization drive at FedEx. The second involves drivers of the Dallas-Fort Worth branch of the SuperShuttle that transports travelers to airports around the country.
In the FedEx (NYSE: FDX) case, the NLRB in 2014 handed down a ruling that provided a more expansive definition of what constitutes an employee as opposed to an IC. In doing so, according to Richard Reibstein, who publishes a legal blog about independent contractor litigation for the law firm of Locke Lord LLP, the NLRB was ignoring an earlier 2009 court decision regarding independent contractor status at FedEx Freight, where the court overturned an earlier NLRB decision.
The 2014 decision by the NLRB led to more litigation. “Not surprisingly, upon review by the D.C. Circuit, it again reversed the NLRB in FedEx II,” Reibstein wrote.
In the SuperShuttle case from 2017, a battle over whether drivers of SuperShuttle vans were employees or ICs ended up with the NLRB — by then dominated by Republicans — ruling that the legal “economic realities” test of determining IC status meant that the SuperShuttle drivers were fairly classified as independent contractors, not employees.
What the NLRB is seeking to do in its latest action, now that it is dominated by Democrats, is turn back the clock and go back to the test it applied in the FedEx case, regardless of the subsequent losses in the D.C. Circuit Court.
Lotito was blunt about the strategy. “The board is hell-bent on making a very expansive definition of employees,” he said. “They are saying in no uncertain terms to litigants that if you don’t like what we’re doing, you better have a lot of money because you are going to have to keep suing us. We will wait for the courts to tell us ‘no.’”
The NLRB is effectively saying, “We don’t care what the Circuit Court said to us,” according to Lotito.
Specifically, last week the NLRB put out a call for a review of a regional decision in which a group of makeup artists and hairstylists who work for The Atlanta Opera were deemed to be employees, not independent contractors.
The call for a revived discussion of NLRB policy is seeking legal briefs by Feb. 25. According to the document published by the NLRB, the board will seek input on two questions. One: “Should the board adhere to the independent contractor status in SuperShuttle DFW?” Two: “If not, what standard should replace it? Should the board return to the standard in FedEx Home Delivery, either in its entirety or with modifications?”
Reibstein described the move by the NLRB as “highly unusual.” But he expressed certainty on where the case is going, at least for the NLRB itself. “We expect the NLRB will formally reverse SuperShuttle and revive its 2014 decision in FedEx, perhaps with a twist or two that the majority may hope will avert yet another reversal by the D.C. Circuit,” he wrote.
The law firm of Fisher Phillips, in its review of the NLRB call for briefs, said it was confident that “the standard will be shifted to make it more difficult for businesses to classify workers as independent contractors.”
Even with those changes, a decision by the NLRB to go back to its FedEx standard “seems to fly in the face of the D.C. Circuit’s rather strong rebuke of the Board’s express refusal to follow the D.C. Circuit’s prior decision,” Reibstein wrote.
The fight over the NLRB definition of IC status will now become another battleground for 2022 on the issue, which will always be impacted by jurisdiction, a pile of different legal precedents and the political leanings of regulators.
What the NLRB is pursuing is separate from a possible new definition of independent contractor status that could come out of the Wage and Hour Division of the Department of Labor.
After the Biden administration got rid of a Trump-era definition that never had the opportunity to actually go into effect, a new definition is generally expected to be introduced that would govern activities of the WHD, though the time of that introduction is not known. That definition would not necessarily line up with a new NLRB decision, but both would come from an administration that clearly favors a wider definition of workers as employees rather than independent contractors.