NLRB Ditches Trump-Era Independent Contractor Test – Reverts to 2014 Obama Standard

Employment Law

NLRB Ditches Trump-Era Independent Contractor Test – Reverts to 2014 Obama Standard

Jun 21, 2023 | Employment Law

In The Atlanta Opera, 372 NLRB 95 (2023), a decision that may have particular significance for gig-economy businesses relying extensively on independent contractors, such as DoorDash and Lyft, the National Labor Relations Board (Board) got rid of its Trump-era independent contractor test under the National Labor Relations Act (NLRA) that had focused special significance on whether a worker had “significant entrepreneurial opportunity for gain or loss.” In the place of that 2019 ruling in SuperShuttle DFW, Inc., the Board announced that it was returning to the Obama-era independent contractor test first articulated in 2014, in FedEx Home Delivery (FedEx II) decision.

Entrepreneurial Opportunity is No Longer the Primary Focus for Independent Contractor Status.

FedEx II and SuperShuttle both take “entrepreneurial opportunity” into account but differ in the weight it should be given in determining whether a worker is an independent contractor. The Atlanta Opera decision expressly rejected SuperShuttle’s premise that “entrepreneurial opportunity” for gain or loss should be the primary or “animating principle” of the independent contractor test. In returning to the FedEx II standard, the Board explained that “entrepreneurial opportunity still would be taken into account” but only as one of a number of equally weighted common law factors, in determining whether a putative independent contractor is, in fact, “rendering services as a part of an independent business.” 

Multiple Common Law Factors Will Equally Influence Whether a Worker is a Contractor.

Moving forward the Board’s focus will be on “’actual, . . . not merely theoretical,’ entrepreneurial opportunity” as one of multiple factors that will inform and influence its independent contractor test, including:

  • The extent of control which the employer 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 employer or the worker supplies the tools, and the place of work for the person doing the work;
  • The length of time for which the worker 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 employer;
  • Whether or not the parties believe they are creating an independent contractor relationship; and
  • Whether the worker is or is not in business.

What Impact is Atlanta Opera Expected to Have on Employers?

For employers, is the Board’s decision in Atlanta Opera significant? Perhaps. The Board enforces the NLRA, which, as the statute’s moniker suggests, applies only to employer-employee relationships. It does not cover or provide legal rights to independent contractors. Because both the old SuperShuttle and new Atlanta Opera tests rely on the same set of common law factors, albeit weighted differently, the initial impact of Board’s decision may be muted. In addition, it is too early to predict whether Atlanta Opera will survive expected legal challenges on appeal to the U.S. Court of Appeals for the District of Columbia. While all of that is being sorted out, though, employers should utilize the time to fine tune their current independent contractor agreements, giving careful consideration to whether those agreements allow contractors sufficient actual control and independence over all of their work but the end product and provide actual and significant opportunity for entrepreneurial gain or loss.

Bean, Kinney & Korman’s employment law practice group works proactively with employers of all sizes, to craft a full range of employment policies and documents, including independent contractor agreements, to meet the compliance challenges of the NLRA and all applicable federal, state, and local laws.

If you have questions about the NLRB’s decision in Atlanta Opera or need assistance with your severance agreements or other employee policies or forms, please contact Doug Taylor at (703) 525-4000 or rdougtaylor@beankinney.com, or your current Bean, Kinney & Korman attorney.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.

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