By: Yaqarah Letellier
Independent contractors make up a large portion of the workforce, about 1 in 10.[1] The two experiences that connect me to this topic is: my previous work experience and my first semester legal writing assignment. Before law school, I worked as an independent contractor for a company that specialized in Human Capital and Benefits such as health and welfare benefits. Later, I was converted to an actual employee with considerably similar duties as an independent contractor but with better benefits.
My experiences with the topic of independent contractors led me to understand that the line between independent contractor and employee is not always distinct. However, employee protections can range from medical insurance and unemployment insurance to vicarious liability and union membership.[2] Recently, the National Labor Relations Board has potentially reshaped how protected independent contractors, who may actually be employees, are.[3]
The NLRB did not punish the employer, Velox Express, for misclassifying Jeannie Edge as an independent contractor.[4] The case arose when Ms. Edge complained about the classification of drivers as independent contractors and was subsequently fired. Ms. Edge transported specimens for Velox Express to be delivered to a laboratory.[5] The question of whether Ms. Edge was wrongfully terminated seemed to be easily solved when the Board stated that “[Velox Express] violated Section 8(a)(1) [of the National Labor Relations Act (“NLRA”)] by discharging an individual driver for raising protected group complaints.” Section 8(a)(1) protects the right of employees to unionize and penalizes those who coerce employees from exercising their right to unionize or not.[6]
Additionally, the Board agreed with Ms. Edge that the drivers were employees. Although the Board agreed with Ms. Edge that the drivers were misclassified, on appeal, they did not agree that the misclassification was a violation.[7] The Court stated misclassifications are often employer mistakes not intentional denials of a worker’s rights. [8]
The Board stated that litany of federal, state, and local law standards may easily lead an employer to misclassify workers and a heavy employer burden as persuasive factors.[9] The Board was persuaded by the following argument:
[A]n employer merely expresses a legal opinion when it informs its workers that they are independent contractors, and that an employer’s statement of a legal opinion, even if that opinion is ultimately mistaken, is protected by Section 8(c). In addition, they contend that when Congress excluded independent contractors from the Act’s coverage, it did not intend to unduly restrict business formation by penalizing employers for making mistakes when initially classifying their workers, especially given that classification decisions are rendered complicated not only by the multifactor common-law standard for purposes of the Act, but also because employers must consider a variety of independent-contractor standards under different Federal, State, and local laws and regulations. Velox Express, Inc., 368 NLRB No. 6, at *6 (Aug. 29, 2019).
The Board stated “reasonable minds can, and often do, disagree.”[10]Additionally, “the same set of factors that was decisive in one case may be unpersuasive when balanced against a different set of opposing factors.”[11]
As someone who has applied the New York common law test I agree that there were so many factors, up to nine, that needed to be considered.[12] Further, many cases with workers in the same areas, such as delivery drivers, were classified as employees in one case but independent contractors in another with seemingly little differences from one scenario to another.[13] The burden to uniformly comply with all tests to determine whether a worker is an employee is a heavy one.
Conversely, as a former independent contractor who worked diligently to be converted to employee status, the position of an independent contractor can be a vulnerable one. The Obama Administration sought to remedy some of the vulnerabilities of independent contractor status by penalizing those who misclassify employees as such.[14] As the article, Lots of Employees Get Misclassified as Contractors: Here’s Why It Matters, worker misclassification can reduce earnings and leave people without benefits like medical insurance.[15]Independent contractors benefit employers because less federal and state taxes can be paid, and overtime requirements may be more lenient.[16]
The Board believes worker misclassification violations should not be applied on a per se basis, or so literally.[17] Instead, the Board stated “[Congress] intended to ‘eliminate the causes of certain substantial obstructions to the free flow of commerce,’ not to create new obstructions to the formation of legitimate business relationships.”[18] The Board hints that a totality of circumstances may be sufficient to show an intentional misclassification violation but a “stand alone” violation is not enough.[19] Stand alone violations show that the worker was misclassified but do not sufficiently show intention to do so.[20] The Court said notice posting, or “post[ing] a notice stating, among other things, that it will not discharge its drivers for engaging in concerted activity, ‘such as challenging our assertion that you are independent contractors [is sufficient]’ . . . to dissipate fully the coercive effects of the unlawful discharge.”[21]
Ultimately, based on this decision,
employees who are truly independent contractors may still be protected.[22]
Ms. Edge was rehired and Volex was ordered to give her back pay.[23]
However, a worker may not want to wait to be fired and miss paychecks to be
vindicated.
[1] David Weil, Lots of Employees Get Misclassified as Contractors. Here’s Why it Matters, Harvard Business Review (July 05, 2017), https://hbr.org/2017/07/lots-of-employees-get-misclassified-as-contractors-heres-why-it-matters.
[2] Bran Noonan, The Campaign Against Employee Misclassification, N.Y. St. B.J., October 2010, at 42. ;see also Kyla Miller, The Misclassification Trend: How Independent Contractor Status Could Affect Consumers, 28 Loy. Consumer L. Rev. 333 (2016).
[3] Velox Express, Inc. and Jeannie Edge, 368 NLRB No. 61, at *11-12. (Aug. 29, 2019).
[4] Id.
[5] Id.
[6] 29. U.S.C.A. § 158(a); see also https://www.nlrb.gov/rights-we-protect/whats-law/unions/coercion-employees-section-8b1a
[7] Velox Express, Inc., 368 NLRB No. 61, at *8.
[8] Id.
[9] Id.
[10] Id. at 8.
[11] Id.
[12] Sanabria v. Aguero-Borges, 117 A.D.3d 1024, 1025 (2d Dep’t 2014).
[13] In re Baez, 143 A.D.3d 1190, 1192 (3d Dep’t 2016); Sanabria 117 A.D.3d at 1027; Gfeller v. Russo, 45 A.D.3d 1301, 1303 (4th Dep’t 2007).
[14] Weil, Lots of Employees Get Misclassified as Contractors. Here’s Why it Matters, Harvard Business Review
[15] Id.
[16] Id.
[17] Velox Express, Inc., 368 NLRB No. 61, at *8-9.
[18] Id. at *9.
[19] See id.
[20] Id.
[21] Id. at *1.
[22] Id. at *15.
[23] See id.
