On June 13, 2023, the National Labor Relations Board (NLRB) decided Atlanta Opera, Inc., replacing the existing legal test set forth in SuperShuttle DFW, Inc., for determining whether a worker is an employee and covered by federal labor laws, or an independent contractor and outside most of those protections.
The NLRB’s decision in Atlanta Opera, Inc. represents a return to the President Obama-era test for independent contractors laid out in FedEx Home Delivery, a test which tends to yield much more employee-friendly results. The practical outcome of the NLRB’s decision is that more workers will be considered employees.
The analyses for determining how to classify a worker set forth previously in FedEx and SuperShuttle both involve the application of the following ten factors which come from common law:
(a) The extent of control which, by agreement, the employer may exercise over the details of the work.
(b) Whether or not the one employed is engaged in a distinct occupation or business.
(c) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
(d) The skill required in the particular occupation.
(e) Whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work.
(f) The length of time the person is employed.
(g) The method of payment, whether by the time or by the job.
(h) Whether or not the work is part of the regular business of the employer.
(i) Whether or not the parties believe they are creating the relation of master and servant.
(j) Whether the employer is or is not in the business.
While the tests found in FedEx and SuperShuttle both involve the application of the above factors, the two decisions provided different weight to another factor generally considered by the NLRB in determining employment classification: the individual’s entrepreneurial opportunity for gain or loss.
The SuperShuttle ruling placed greater weight on entrepreneurial opportunity than any other factor, stating “[W]here the common-law factors, considered together, demonstrate that the workers in question are afforded significant entrepreneurial opportunity, we will likely find independent-contractor status.” The current Atlanta Opera/FedEx ruling considers entrepreneurial opportunity to be relevant to the analysis, but states that evidence of entrepreneurial opportunity must actually result in that worker engaging in independent business activities. The NLRB held in FedEx: “[We disagree] that even a showing of theoretical entrepreneurial opportunity supports a finding of independent-contractor status.”
McMahon Berger will continue to monitor the General Counsel’s and the NLRB’s actions with respect to the classification of workers as employees or independent contractors. Employers should proceed with caution when classifying their workers and be aware of the recent decision discussed here which will have the result of a greater number of workers being classified as employees. Consider consulting with experienced labor counsel to minimize the risk of potential violations of the NLRA.
The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.