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NLRB Overturns Standard for Independent Contractor Status Under the NLRA

26 Jun

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Update Applicable to:

All employers who may have working agreements with contractors

What happened?

In a decision issued on June 13th in The Atlanta Opera, Inc., the Board returned to the 2014 FedEx Home Delivery (FedEx II)standard for determining independent contractor status under the National Labor Relations Act (the Act), and overruled SuperShuttle (2019). In applying the FedEx II standard, the Board concluded that the makeup artists, wig artists and hairstylists who work at the Atlanta Opera are employees, not independent contractors.

What are the details?

In The Atlanta Opera, the Make Up Artists and Hair Stylists Union, affiliated with IATSE had filed a petition to represent the makeup artists, wig artists, and hairstylists (collectively the “stylists”) who worked with the Atlanta Opera on its productions. The employer, the Atlanta Opera asserted that the stylists were independent contractors and therefore not covered by the NLRA.

On June 17, 2021, the Acting Regional Director issued a Decision and Direction of Election finding that the stylists were statutory employees under the Act. The employer filed a request for review of the Acting Regional Director’s Decision and Direction of Election, which was granted by the Board.

The Board utilized the employer’s request for review of the Acting Regional Director’s Decision and Direction of Election as an opportunity to potentially overrule SuperShuttle and invited briefing in order to determine the following:

  1. Should the Board adhere to the independent contractor standard in SuperShuttle?
  2. If not, what standard should replace it? Should the Board return to the standard in FedEx II, either in its entirety or with modifications?

The Board ultimately overruled SuperShuttle and reinstated the standard and approach from its prior decision in FedEx II. Both decisions utilize the same common law factors but differ in their approach to assessing how “entrepreneurial opportunity” of the workers affects the overall analysis of the common law factors.

The traditional common law factors generally focus on the degree of control that an entity has over the work, the presence of special skills of the worker to do the work, and the basis of payment. More specifically, the factors are as follows:

  • The extent of control that the business exercises over the details of the work.
  • Whether the worker is engaged in a distinct occupation or business.
  • Whether, in the locality, the work is usually performed under the direction of the employer, or by a specialist without supervision.
  • The skill required in the particular occupation.
  • Who supplies the instrumentalities, tools, and place of work for the person performing the work.
  • The length of time for which the worker is engaged.
  • Whether the worker is paid by the time spent working, or by the job.
  • Whether the work is a part of the entity’s regular business.
  • Whether the parties believe they are creating an employment relationship.
  • Whether the worker is in business.

In a footnote, the Board majority indicated that the new standard will be retroactively applied to all cases currently pending before the Board.

For more information, please see the links below:

NLRB News Release

Case Documents

Article 1, Article 2, Article 3

What do employers need to do?

Employers should review the above links and with their employment attorney, reevaluate any current agreements and working arrangements they may have with contractors and be aware of any new future working arrangements with contractors.

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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