The National Labor Relations Board issued a decision overturning a union-friendly test for independent contractor status that had been adopted by the Board during the Obama Administration. In its decision in SuperShuttle DFW Inc., the NLRB, which is now controlled by a majority of members appointed by President Trump, has reverted to the common law test for IC status that was articulated by the U.S. Supreme Court 50 years ago. According to the Board majority, those common law factors must be examined “through the prism of entrepreneurial opportunity.” What does this mean? Businesses that oppose efforts by unions to organize and represent drivers and other workers providing services as independent contractors or franchisees will have a far less challenging time proving that the workers are not employees but rather are ICs, who are excluded from coverage under the National Labor Relations Act.
Analysis
This case involved a decision by an NLRB Regional Office finding that shuttle drivers who owned and operated franchises of SuperShuttle DFW, Inc. were independent contractors and not employees eligible to be represented by a union under the National Labor Relations Act. In reaching its decision, the Regional Office had applied the Board’s traditional common law agency test. That decision was reviewed at the behest of the union. But instead of simply affirming the decision, the NLRB (in a 3-1 decision, with Member McFerran dissenting) used the occasion to overrule the earlier NLRB decisions that were union-friendly.
But, as a practical matter, the NLRB’s prior test was of limited value to unions anyway because it had been rejected by the United States Court of Appeal for the District of Columbia in a case involving FedEx Ground, as explained in an earlier blog post. When the NLRB disregarded the D.C. Circuit’s decision in a second FedEx Ground case, the D.C. Circuit reversed the NLRB once again, stating: “It is as clear as clear can be that ‘the same issue presented in a later case in the same court should lead to the same result.” The court then stated emphatically: “Doubly so when the parties are the same.” After observing that the NLRB was simply seeking to “nullify this court’s [prior FedEx] decision,” it remarked: “This case is the poster child for our law-of-the-circuit doctrine, which ensures stability, consistency, and evenhandedness in circuit law.”
Although both the majority and dissenting opinions in the SuperShuttle DFW case spent a great deal of time rebutting the other’s arguments – the majority in a 14-page decision and Member McFerran in a 15-page dissent. But the actual holding of the case is rather straightforward: based on the Supreme Court’s decision in 1968 in NLRB v. United Insurance Co. of America, which adopted the test for independent contractor status set forth in the 1958 edition of the Restatement (Second) of Agency, the Board will henceforth apply a “non-exhaustive” list of common law factors (described below). The Board majority cautioned, though, that those factors are not a “shorthand formula” for IC status; rather, “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.” Those factors will then be examined in view of the “total factual context” of the business and industry, and evaluated “through the prism of entrepreneurial opportunity.”
Those last two words were at the crux of the counterpunching between he majority and dissent, with the majority stating that “entrepreneurial opportunity” is not a separate common law factor or a “super-factor,” as the dissent claims, and the dissent claiming that the majority opinion makes it a “trump card” in the independent contractor analysis.
