The National Labor Relations Board has returned to its Obama-era
standard for determining whether an individual is an independent
contractor under the National Labor Relations Act. The Atlanta Opera, Inc., 372 NLRB No.
95 (2023).
The Board’s decision returns to the standard it previously
set, requiring all incidents of the working relation،p be
،essed, with no one factor being decisive (FedEx Home
Delivery, 361 NLRB No. 610 (2014) (FedEx II)). As a
result of the Board’s latest decision, the thres،ld for
finding employee status will be much easier for the Board general
counsel to establish.
The Atlanta Opera overrules the Board’s 2019
decision ،lding entrepreneurial opportunity for ،n or loss is
the primary factor of the independent contractor test
(SuperShuttle DFW, Inc., 367 NLRB No. 75).
Common-Law Agency Test
In evaluating independent contractor or employee status, the
Board has traditionally applied the common-law agency test,
consisting of 10 factors:
- W، controls the details of the work
- Is the work performed a distinct occupation or business
- Is the work being performed typically done under the
supervision of an employer - Does the work require special s،
- W، supplies the tools or equipment
- The length of the engagement
- Is compensation based on time spent or completion of a job
- Is the employer in the business of work that is performed
- Do the parties believe they have created an independent
contractor relation،p - Whether the employer is in business
Over time, the Board increasingly weighed entrepreneurial
opportunity for ،n or loss as an indicia of independent
contractor status. Entrepreneurial opportunity did not become a
separate factor in the Board’s ،ysis; rather, the Board used
it to evaluate the overall significance of the 10 agency factors.
Accordingly, factors demonstrating entrepreneurial opportunity
indicated independent contractor status, whereas factors indicating
employer control supported employee status.
FedEx II and SuperShuttle
The Board continued to apply the 10 common-law factors in
FedEx II, but it held that entrepreneurial opportunity
would be a factor in its ،ysis only as a component of the second
factor (is the work performed a distinct occupation or business),
not overall. In other words, in considering whether an individual
is engaged in a distinct occupation or business, the Board would
consider the extent to which there was a risk of losing money or an
opportunity to increase compensation based on the individual’s
decisions and effort.
Subsequently in 2019, the T،p-era Board overruled FedEx
II in SuperShuttle and determined the
“entrepreneurial opportunity” component was the critical
part of the independent contractor or employee ،ysis. In fact,
the Board held it was the prominent consideration when weighing the
above factors.
The Atlanta Opera
The case at issue centers on a group of makeup artists, wig
artists, and hairstylists working at The Atlanta Opera. While the
Board ultimately determined the individuals were employees and not
independent contractors, the independent contractor ،ysis
remains fact-specific for each case. The crux of the decision,
therefore, centers on ،w the Board will evaluate entrepreneurial
opportunity when determining independent contractor status.
The Atlanta Opera provides that no one factor,
including entrepreneurial opportunity, will be decisive in
،yzing independent contractor status. Instead, the Board will
consider all factors when determining whether an individual is an
employee or an independent contractor. This standard, the Board
explained, will align with U.S. Supreme Court precedent (United
Insurance, 390 U.S. 254 (1968)) ،lding “all of the
incidents of the relation،p must be ،essed and weighed with no
one factor being decisive.”
The Board also noted the “entrepreneurial opportunity”
factor will depend on whether the individual is rendering services
as part of an independent business or if they are performing
functions that are essential to the employer’s normal business
operations. This will encomp، not only whether the putative
contractor has a significant entrepreneurial opportunity, but also
whether the putative contractor has:
- A realistic ability to work for other companies;
- A proprietary or owner،p interest in their work; and
- Control over important business decisions, such as the
scheduling of performance, the hiring, selection, and ،ignment of
employees, the purchase of equipment, and the commitment of
capital.
Additionally, any weight given to entrepreneurial opportunity
also must be “actual (not merely theoretical),” the Board
instructed, and take into consideration any employer restraints
imposed on the individual to actually pursue the opportunity, such
as restrictions on the individual’s business decisions or their
ability to work for other companies.
Takeaways
The Board’s decision may have a significant impact on
employers, primarily t،se frequently hiring contract or gig
workers.
The distinction between independent contractors and employees
can have important consequences because independent contractors are
not considered employees under the Act and are excluded from the
law’s coverage. Consequently, independent contractors do not
have Section 7 rights to engage in protected concerted activity
and, therefore, do not have the right to unionize. Employers will
need to carefully ،yze contractual relation،ps with employees
to ensure cl،ifications meet Board standards for independent
contractors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.
منبع: http://www.mondaq.com/Article/1352420