The National Labor Relations Board (NLRB) has been right in the middle of the battle over what constitutes an independent contractor versus an employee. An interested party might think the NLRB, a relatively small government agency historically concerned about union organizing and labor peace, would not be at the forefront defining what an independent contractor is for the country. But for the last few years, this agency, probably for existential reasons given the state of unionization in the country (under 7% in the private sector), has issued many rulings expanding its regulatory purview over who is an employer for labor law purposes.

The NLRB’s interest in joint or independent contractor relationships is the monitoring of labor violations and determining if the two parties may have shared collective bargaining obligations with the workers employed by the vendor contractor.

One would think this is more of a Department of Labor Wage and Hour or Internal Revenue Service concern, right? The DOL is in fact working on its own set of rules defining independent contractor or joint employment status. So why does the NLRB concern itself over whether a worker is an independent contractor or not?  Because the NLRB worries that businesses and workers will use the independent contractor classification to skirt the right of the worker to organize in a union.

Last week the NLRB continued its rollback of pro-labor decisions by holding in its Velox Express decision (15-CA-184006) that the employer had not infringed upon the workers’ rights by mistakenly classifying them as independent contractors. This decision continues a push against recent and previous NLRB decisions tying contractor status directly to a National Labor Relations Act unfair labor practice.

In this case, a driver for Velox complained that she was misclassified as a contractor by Velox. Velox subsequently fired her. Technically, as a contractor they released her from services. The employee argued this was an unfair labor practice and a violation of her right to organize. However, under the NLRA, because she was classified as an independent contractor rather than an employee, she did not have the right to organize at Velox regardless of her employee/contractor status.

The Board found that misclassification alone is not an unfair labor practice and illegal. Rather, an employer’s actions toward the workers (whether an employee or a misclassified worker) is what determines an unfair labor practice. The NLRB reasoned that misclassifying workers as independent contractors “does not, in and of itself, contain any ‘threat of reprisal or force or promise of benefit’” -- the true actions that do violate the NLRA’s Sec. 8 protections.  

This holding, though somewhat esoteric, supplements the Trump Board’s intentions to not only continue rolling back the pro-labor board’s rulings but to properly define how the NLRB can determine a contractor from a worker. To circumvent the future back and forth re-definition, the Trump Administration issued proposed rules on Joint Employment in September of 2018. These rules are under review and undergoing the process for finalization. If they are finalized, future Boards will be compelled to use those regulatory criteria and in turn stay “in its lane” as to authority over employer contractual relations with vendor-contractors.

Sources: Law 360 NLRB Says Misclassifying Workers Doesn’t Violate Labor Law by Baden Campbell (8/29/2019) NLRB Proposed Rules The Standard for Determining Joint-Employer Status (Federal Register 9/14/2018) Joint Employer, Law 360 OT Rules Headline Packed Regulatory Queue (8/30/2019)