NLRB Modifies Independent Contractor Test

In a decision issued this week, the National Labor Relations Board (NLRB or Board) has again changed its test for determining whether an individual is an independent contractor under the National Labor Relations Act (NLRA). In the case of The Atlanta Opera, Inc., the Board returned to the test set forth in its 2014 decision of FedEx Home Delivery and threw out the employer-friendly test adopted in the 2019 case of SuperShuttle.

The new test will make it harder for employers to convince the Board that workers are independent contractors who are not covered by the NLRA. In other words, it is now more likely that the Board will find workers to be employees who are entitled to join unions and are protected in their efforts to engage in protected concerted activities.

The Board will consider the following factors when seeking to determine whether a worker is an employee or independent contractor:

• the extent of control the company exercises over the details of the work;
• whether or not the worker is engaged in a distinct occupation or business;
• 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;
• the skill required in the particular occupation;
• whether the company or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
• the length of time for which the person is employed;
• the method of payment, whether by the time or by the job;
• whether or not the work is a part of the regular business of the company/employer;
• whether or not the parties believe they are creating an independent contractor relationship;  
• whether the employer is or is not in business;
• whether the worker is, in fact, rendering services as an independent business and has actual (not merely theoretical) entrepreneurial opportunity for gain or loss, which includes whether the worker can hire his own employees, has a realistic ability to work for other companies, and has control over important business decisions, such as scheduling, hiring, selection and assignment of employees, the purchase and use of equipment, and the commitment of capital.

Classifying workers as independent contractors is a complicated, factually-controlled decision fraught with liability. Employers need to understand that the NLRB, and other federal and state agencies, are currently strongly opposed to the independent contractor classification and will scrutinize every facet of your working relationship with such individuals. KZA attorneys are always available to help you navigate this difficult area of the law.  

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.