NLRB Revises Independent Contractor Standard

Published by Meg Vergeront on

On January 25, 2019, the National Labor Relations Board (the Board) issued a decision revising the standard for determining whether a worker is an independent contractor for the purposes of the National Labor Relations Act (NLRA).  SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338, Case 16-RC-010963 [link].  The determination is important because only those workers who are employees—and not independent contractors—have rights under the NLRA. 

In SuperShuttle, the Board overruled a 2014 decision and returned to the use of the common law test to determine independent contractor status.  That test includes consideration of: 

  • The extent of control the employer may exercise over the details of the work;
  • Whether the worker is engaged in a distinct occupation or business;
  • The kind of occupation and whether the work is usually done under the direction of the employer or by a specialist without supervision;
  • The skill required in the occupation;
  • Whether the employer or the worker supplies the instrumentalities, tools and the place of work for the work to be done;
  • The length of time for which the worker is employed;
  • The method of payment—whether by the time or by the job;
  • Whether the work is a regular part of the business of the employer;
  • Whether the parties believe they are creating an independent contractor relationship;
  • Whether the employer is or is not in business.

The Board also made it clear that entrepreneurial opportunity—the worker’s opportunity for profit and loss—will be used as an overarching interpretive device in considering whether a worker is an independent contractor under the common law test.  As the majority of the Board explained, “[w]here a qualitative evaluation of common-law factors shows significant opportunity for economic gain (and, concomitantly, significant risk of loss), the Board is likely to find an independent contractor relationship.”

The Board then applied this revised test to the facts before it.  In SuperShuttle, a union filed a petition seeking to represent the SuperShuttle van drivers who transported passengers to and from area airports.  Each of the drivers had signed a franchise agreement with SuperShuttle that required the driver to pay a flat, one-time initial fee and then a flat weekly fee thereafter to maintain the franchise.  On these facts, the Board determined that the van drivers were in fact independent contractors.  The most significant factors were:

  • The drivers were required to provide their own vehicles and cover all costs of vehicle operation and maintenance;
  • The drivers were able to accept or decline trips booked by passengers;
  • The drivers paid a weekly franchise fee unconnected to the amount of the fares they collected and;
  • The drivers’ earnings were determined by how much they chose to work, how well the managed their expenses and how well they managed the process through which they selected fares.

The standard, of course, is fact-intensive and is applied on a case-by-case basis.  Nonetheless, the decision in SuperShuttle gives some guidance as to how the standard may be applied in the future. 

Employers should keep in mind that SuperShuttle articulates the standard applied by the Board with respect to independent contractor status under the NLRA.  Different laws, for example, unemployment and workers’ compensation laws, may have different standards that must be used to determine whether a worker is an independent contractor or an employee subject to that particular law.

Filed Under: employment law

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