Today more than ever, U.S. businesses supplement their workforce with independent contractors as a solution to competitive and customer pressures. The use of contractors is entirely legal. But the correct classification of workers as contractors, as opposed to employees, is a complex analysis with frameworks that differ across a variety of governing laws. Employers, therefore, sometimes get this wrong. Recognizing the likelihood that workers are sometimes misclassified as contractors, on August 29, 2019, the National Labor Relations Board (the NLRB or Board) issued an important opinion for businesses when it held that misclassification of employees as contractors is not a violation of federal labor law.

NLRB pro-business opinion

Velox Express, Inc. is in the medical courier business. It supplements its driver workforce with independent contractors. Velox terminated its contract with one such driver, Jeannie Edge, when Edge began voicing concerns on behalf of herself and other drivers that Velox had misclassified them as contractors instead of employees. Edge filed an unfair labor practice charge claiming that the driver misclassifications violated the National Labor Relations Act (the Act). The administrative law judge agreed. In Velox Express, Inc. and Jeannie Edge, the Board, which has a three-member Republican majority, affirmed the judge’s ruling that Velox misclassified Edge and other drivers as independent contractors under the Act, but held that the misclassification, in and of itself, did not violate the Act. 368 NLRB No. 61.

Section 8(a)(1) of the Act provides that it is an unfair labor practice for an employer “to interfere with, restrain, or coerce employees” from exercising their legal right to engage in protected concerted activity under the Act. The Board explained that an employer’s mistaken classification of employees as independent contractors does not interfere with or threaten any workers’ right to engage in protected activity under the Act, even if independent contractors cannot join a union. Id. at 6. The Board’s rationale was that when workers are classified as independent contractors, they still retain the right to disagree with their classification and engage in protected activity, which is exactly what Edge did. The employer violates the Act only if it responds to the protected activities with threats, promises, and interrogations. Id. at 6. The Board held that “[e]rroneously communicating to workers that they are independent contractors does not, in and of itself, contain any threat of reprisal or force or promise of benefit.” Id.
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