Update Applicable to:

All employers

What happened?

Due to Atlanta Opera Ruling by the National Labor Relations Board (NLRB), from now on the standard will revert to the one stablished in the Obama administration, which means that it will be harder for employers to classify people as contractors.

What are the details?

“Under federal law, employees may be entitled to union rights, minimum wage, overtime pay and other benefits. Independent contractors are not entitled to such benefits, but they generally have more flexibility to set their own schedules and work for multiple companies” – SHRM.

Now due to a recently NLRB ruling in a case know as Atlanta Opera Inc., the standard has reversed to a more lax one, which would allow more people to be classified under employees and not contractors.

For additional information regarding the difference in standards: Link.

For additional information about the test used previously: Link and Link.

Consult the provided resources for more detailed information.

“The new ruling is designed and intended to make it much more difficult for employers to classify workers as independent contractors and therefore avoid the potential for those workers to organize. This new decision will serve potentially as a solid deterrent for many employers and create doubt for others, or at least make them think twice and re-evaluate how and how often they utilize independent contractors.” said Jason Reisman, an attorney with Blank Rome in Philadelphia, according to SHRM.

For more information, please see the links below:

Law Firm articles: Article 1, Article 2, Article 3, Article 4, Article 5

What do employers need to do?

Employers should review their hiring policies regarding their independent contractors to see if they comply with the new (old) standard and avoid potential risk. Employers should consult with their attorney on how to review and adjust their policies and practices based on the board’s decision.

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