NLRB Returns to Prior Standard for Independent Contractors In SuperShuttle Decision

By Corinne Tierney

The National Labor Relations Board (the “Board”) recently returned to its common-law agency standard for determining independent contractor status under §2(3) of the National Labor Relations Act (the “NLRA”).[1]  Independent contractors are generally not covered under labor laws, wage and hour laws, workers compensation, and other employee benefits.  The Board overruled the standard from 2014,[2] and returned to the standard set forth in 2009.[3]  The Board concluded that that the franchisee drivers working for SuperShuttle, a company engaged in ride-sharing with two local airports, are independent contractors and are therefore excluded from the NLRA.

In 2009, the United States Court of Appeals for the District of Columbia Circuit held that the 10-factor common-law agency test in the Restatement (Second) of Agency,[4] considered with the factor of “entrepreneurial opportunity” would determine the status of an independent contractor for purposes of the NLRA.[5]  The court asserted that an “animating principle” of independent contractor status is whether the job presents “significant opportunity for gain or loss.”[6]  The court cited the Board’s precedent cases in the taxicab industry, which have given weight to two factors when determining entrepreneurial opportunity: (1) whether a lack of relationship existed between the company’s compensation and the amount of fares collected by the driver, and (2) whether the company had a lack of control over the manner and means by which the drivers conducted business.[7]

In 2014, the Board “refined” this standard by declining to accept the court’s entrepreneurial opportunity test, claiming it was merely one factor to consider along with the common-law agency test, but that it was by no means the decisive factor.[8]  The Board’s SuperShuttle decision overruled this refinement because it “fundamentally shifted” the independent contractor analysis into an economic realities test which diminished the entrepreneurial opportunity factor’s significance.[9]

Returning to the 2009 standard, the Board reached the Acting Regional Director’s original conclusion that the franchisees are independent contractors.[10]  The Board held that the drivers’ ability to keep the all collected fares, the selection of their own hours and routes, and the ownership and operation of their own vehicles demonstrated significant entrepreneurial opportunity for gain and loss.

The lone dissenter, Member Lauren McFerran, chastised the majority’s standard as an “economic unrealities test.”[11]  She asserted that the test of independent contractors was created to determine employer control for liability purposes.[12]  She stated that the majority diminished or ignored facts which have typically weighed greatly in favor of employee status due to the significance of employer control.  These considerations include the drivers’ performance of the very core of SuperShuttle’s business, as well as the Unit Franchise Agreement’s provision whereby franchisees must agree to not work for SuperShuttle’s competitors or engage in other transportation service business.[13]  The majority countered this comment by asserting that entrepreneurial opportunity and employer control are “opposite sides of the same coin,” where more of one is less of the other.[14]

Member McFerran also drew attention to the Board’s overturning of a decision without notice and invitation to file briefs.[15]  In a recent interview with Bloomberg Law, Chairman Ring stated the Board’s intention to turn to rulemaking to clarify this murky area of independent contractor and employee status for purposes of the NLRA, as well as other issues such as employer property usage in the context of union activity.[16]  These rules will have serious implications in the growing “gig” economy, where employers heavily rely on independent contractors to perform the very core of their businesses.  If the Board creates policies codifying the standard set forth in SuperShuttle, employers may find it much easier to classify workers as independent contractors.

[1] SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019).

[2] FedEx Home Delivery, 361 NLRB 610 (2014), enf. denied 849 F.3d 1123 (D.C. Cir. 2017) (FedEx).

[3] FedEx Home Delivery v. NLRB, 563 F.3d 492 (D.C. Cir. 2009) (FedEx I).

[4] §220 (1958).

[5] FedEx I, 563 F.3d at 497 (D.C. Cir. 2009).

[6] Id. (citing Corporate Express Delivery Systems v. NLRB, 292 F.3d 777, 780 (D.C. Cir. 2002)).

[7] AAA Cab Services, 341 NLRB 462, 465 (2004).

[8] FedEx, 361 NLRB 610 (2014), enf. denied 849 F.3d 1123 (D.C. Cir. 2017).

[9] SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019), slip op. at 8-9.

[10] Id.

[11] Id. at 29. (emphasis in the original).

[12] Id. at 16 fn. 6 (citing Restatement (Second) of Agency, §220, comment g. (1958)).

[13] Id. at 25.

[14] Id. at 9.

[15] Id. at 15 fn. 2.

[16] Chris Opfer, Contractor of Employee? NLRB May Tackle Question With Rule (1), Bloomberg BNA News (last updated Jan. 28, 2019, 3:36 PM), available at https://news.bloomberglaw.com/daily-labor-report/contractor-or-employee-nlrb-may-tackle-question-with-rule-1 (last visited Feb. 1, 2019).

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