NLRB Ruling Modifies Independent Contractor Test

The National Labor Relations Board (NLRB) recently issued a ruling in Atlanta Opera, Inc., which alters the test employers must use to determine whether workers are independent contractors or employees. In its decision, the NLRB ruled that makeup artists, wig artists, and hairstylists working at the Atlanta Opera were employees, not independent contractors. As a result of the ruling, the workers could file an election petition with the NLRB seeking union representation.

In Atlanta Opera, the NLRB explicitly rejected its previous Supershuttle decision as inconsistent with NLRB precedent, common law, and Supreme Court precedent. The NLRB stated in its Supershuttle decision that entrepreneurial opportunity for profit or loss should be the primary factor in determining whether a worker is an employee or an independent contractor. Conversely, in Atlanta Opera, the NLRB instructs employers to consider entrepreneurial opportunity along with various other common law factors in making this determination, which include the following:

  • The extent of control the employer exercises over the details of the work;
  • Whether the work is usually done under the direction of the employer or without supervision;
  • Whether the worker is engaged in a distinct occupation or business;
  • How much skill is required in the particular occupation;
  • Whether the employer supplies the tools and the place of work;
  • The length of time for which the worker is employed;
  • The method of payment, whether by the hour or by the job; and
  • Whether the work is a part of the regular business of the employer.

The distinction between whether workers are independent contractors or employees is important not only because of the ability to seek union representation. This status also determines other rights under the Fair Labor Standards Act (FLSA), including the right to minimum wage, overtime, and more.

Employers should be aware that this ruling potentially makes it much more difficult to classify workers as independent contractors and therefore avoid them organizing. At the very least, employers must reevaluate their existing independent contractor agreements. Employers can no longer rely solely on industry norms and past practices in classifying independent contractors. Instead, they must pay attention to this constantly evolving area of law and classify their workers accordingly.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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