US NLRB signals an interest in narrowing its independent contractor test

On December 27, 2021, the US National Labor Relations Board (the Board) announced it would revisit the standard for proving independent contractor status under federal labor law. It has invited the parties and interested amici to file briefs by February 10, 2022, addressing two questions:

1. Should the Board adhere to the independent contractor standard in SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019)?

2. If not, what standard should replace it? Should the Board return to the standard in FedEx Home Delivery, 361 NLRB 610, 611 (2014), either in its entirety or with modifications?

In SuperShuttle, the Board applied a traditional common-law agency test for evaluating independent contractors under the National Labor Relations Act (the Act), emphasizing the importance of entrepreneurial opportunity for economic gain in its test. In so doing, the Board overturned the test set forth in its FedEx decision which had de-emphasized the “entrepreneurial opportunity” test in favor of a test that emphasized the right to control and whether the purported contractor “was, in fact, rendering services as part of an independent business.”

The matter currently before the Board arose in connection with a request by an employer, the Atlanta Opera, to review an intermediate decision that makeup artists, wig artists and hairstylists are employees of the opera and not independent contractors. 

The outcome of this reconsideration by the Board will be significant because independent contractors do not have the right to organize or bargain collectively under the Act; only employees do. If the Board abandons its current broad independent contractor test in favor of a more narrow test, then more workers would be eligible to unionize. Companies in the gig economy may feel the impact immediately.

The Board’s decision to set national labor policy through adjudication rather than rulemaking is typical of the Board. More recent rulemaking efforts (e.g., expedited elections, joint employment) are an exception to its historical practice. Still, case-by-case adjudication can lead to a feeling of whiplash for the regulated community as the new Democratic-majority Board quickly looks to put its own stamp on national labor relations policy–in this case, a mere two years after the Trump-era Board issued the SuperShuttle decision. We can expect a decision later in the year.

Of course, the Board’s new independent contractor test would apply only to cases before it and to cases raising the question of who is an employee under the Act. States are free to enact their own tests under state law, which may be more onerous than FedEx or whatever test the Board decides to adopt. California, for example, follows the so-called ABC test, which makes it very difficult for a company to prove that workers are properly classified as independent contractors rather than employees. Efforts to exempt companies that use app-based delivery drivers from the ABC test (which, in any case, has been blocked by a state court) likely would not prevent the Board from applying its own test under the Act.