NLRB Imposes Stricter Independent Contractor Test on Employers
On June 13th, 2023, the NLRB issued a new ruling that held it would return to a prior, employee-friendly standard for determining whether workers are employees or independent contractors under the National Labor Relations Act. Under this, it is likely more workers will be deemed employees as opposed to independent contractors.
In The Atlanta Opera, Inc., the NLRB held that “entrepreneurial opportunity” is merely one additional consideration among other non-dispositive common-law factors the Board must consider to determine a workers classification. Specifically, Atlanta Opera held that when the NLRB does consider “entrepreneurial opportunity,” it “should only give weight to actual (not merely theoretical) entrepreneurial opportunity” by analyzing the limits employers impose on workers seeking such opportunities.
Surprisingly, the NLRB did offer some guidance on what may indicate a worker’s “entrepreneurial opportunity” by looking to whether the workers at issue are providing labor as part of an “independent business” or the employer’s normal operations. The NLRB’s “independent business analysis” requires consideration of whether the workers at issue i) can realistically work for other employers, ii) retain an ownership or other proprietary interest in the employer, and iii) possess control over making key business decisions.
In addition to the independent business analysis, employers must apply the common law test which is an intensive fact-analysis involving several points including the ever-important question of “control” and how much control a purported independent contractor has.
While at this time, the holding doesn’t extend beyond the walls of the NLRB, all signs indicate changes are coming. The proposed DOL rule on independent contractor status is undergoing an overhaul to alight more with this same employee-friendly stance.
In light of this recent decision, Employers should consider a fact-specific analysis of its workforce, specifically the independent contractors, to see if those independent contractors should now be considered covered employees under the NLRA.
Executive Legal Services will continue to monitor developments and provide updates as additional information becomes available. For any questions or assistance with completing a workforce analysis, please contact our firm and we will be more than happy to assist.