Federal agency bolsters argument against organizing contract drivers

Photo credit: Jim Allen/FreightWaves

Photo credit: Jim Allen/FreightWaves

Trucking companies fending off union efforts to organize contract drivers could benefit from an independent federal agency’s decision expanding the definition of an independent contractor.

In ruling in favor of SuperShuttle, an airport shuttle-van service, the National Labor Relations Board (NLRB) on Friday found that the company’s franchisee drivers are not employees under the National Labor Relations Act (NLRA), but instead are independent contractors.

In doing so, the Board “returned to its long-standing independent contractor standard,” it stated, and reaffirmed its adherence to the traditional common-law test. It also clarified the role “entrepreneurial opportunity” plays in determining whether workers are considered independent contractors.

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It noted that the decision, which ruled against a local transit union at Dallas-Fort Worth Airport, overrules a 2014 NLRB decision under the Obama Administration involving a dispute between FedEx (NYSE: FDX) subsidiary FedEx Home Delivery and the Teamsters Union. That decision, the Board stated on Friday, had modified the test for determining independent contractor status and had limited the significance of a worker’s “entrepreneurial opportunity” when trying to earn a living.

In the case of SuperShuttle, the drivers’ leasing or ownership of their work vans, method of compensation, and “nearly unfettered control” over their daily schedules provided them with significant entrepreneurial opportunity to make money, the Board found.

Under this new NLRB standard, all common-law factors will now be evaluated “through the prism of entrepreneurial opportunity” when circumstances warrant that analysis, the law firm Ogletree Deakins wrote in a commentary in the National Law Review. “In effect, the Board made entrepreneurial opportunity an important, overarching consideration in the analysis.”

The debate over how a workforce is classified – employees versus independent contractor – for purposes of union organizing has been a simmering issue in the drayage sector at the country’s two largest container port complexes, Los Angeles-Long Beach and New York-New Jersey.

Last year striking contract drivers at XPO Logistics (NYSE: XPO) and privately held NFI Industries at Southern California ports and area warehouses raised concerns among companies such as Amazon (NASDAQ: AMZN) that rely on them for keeping their supply chains moving.

Efforts by the Teamsters to organize drayage truckers was aided by a California Supreme Court ruling last year making it more difficult to label workers as independent contractors.

The NLRB’s SuperShuttle decision, by contrast, expands the definition of “independent contractor” under the NLRA. It is most likely to benefit businesses that hire workers on a temporary or short-term basis, including those that have emerged as part of the “gig” economy such as Uber, according to Ogletree.

While there may not yet be a strong correlation between gig economy companies and those that perform port drayage, “I think that any business that’s looking at [the independent contractor] issue is going to want to look at this decision, especially if it’s offering workers a great deal of flexibility in when and how they work,” Ogletree lawyer Jesse Dill told FreightWaves.

“Those are the types of businesses that unions will argue drivers are employees, but this decision will offer good support that they’re independent contractors and can’t be recognized as a union” under the NLRA.