In a recent decision involving SuperShuttle drivers, the National Labor Relations Board (NLRB or Board) overruled a 2014 decision making it less likely a worker would be deemed an independent contractor, returning to the more employer-friendly common law test to determine independent contractor status.
In 2014, the Board purported to clarify the standard for evaluating whether a worker is an independent contractor (see FedEx Home Delivery, 361 NLRB 610 (2014)). In FedEx, the Board articulated a new factor in the contractor analysis – whether “putative independent contractor is … rendering services as part of an independent business” (Id.) In doing so, the Board diminished the significance of the putative contractor’s entrepreneurial opportunity in the independent contractor analysis by making it one aspect of the newly created “independent business” prong (Id. at 619).
Last week, the Board overruled FedEx and returned to the traditional common law test. SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019). Under that test, “entrepreneurial control, like employer control, is a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain” (Id. at *9). The Board held that the test articulated in FedEx “fundamentally shifted the independent contractor analysis … to one of economic realities, i.e., a test that greatly diminishes the significance of entrepreneurial opportunity and selectively overemphasizes the significance of ‘right to control’ factors relevant to perceived economic dependency” (Id. at *7-8).
Going forward, the Board will apply the following traditional common law factors when determining contractor status:
- The extent of control the master may exercise 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 business or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
- The length of time for which the person is performing the work.
- The method of payment, whether by the time or by the job.
- Whether or not the work is part of the regular business of the business.
- Whether or not the parties believe they are creating the relation of master and servant.
- Whether the principal is or is not in business.
(Id. at *1-2.)
Applying the common law factors, the Board concluded that SuperShuttle franchisees who transported passengers to and from Dallas-Fort Worth and Dallas Love Field airports were independent contractors (Id. at *1). The Board emphasized, among other things, that the drivers: (a) made a significant investment in their business by purchasing or leasing a van and paying franchise fees; (b) controlled their own schedule; (c) operated with minimal supervision; and (d) kept all fares they received from riders (Id. at *12-14).
What this means for employers
The Board’s re-embrace of the traditional common law standard may provide some relief to entities appearing before it that utilize the services of independent contractors, including those operating in the modern gig economy. However, it is important to note that employers still must satisfy more rigorous independent contractor tests used by other state and federal agencies and courts.