Seyfarth Synopsis: In The Atlanta Opera, 372 NLRB 95 (2023), the National Labor Relations Board overturned Trump-era precedent by modifying its independent contractor test and returning to the test announced by the Obama Board. The NLRB now will review a multitude of enumerated and non-enumerated factors when determining independent contractor status, with no factor being given undue weight. In practical terms, this decision will likely not have much impact.  Even so, employers might consider reviewing their independent contractor practices and policies to ensure they have properly classified groups of workers.

Earlier this week, the National Labor Relations Board’s Democratic members upended prior precedent yet again when it ruled in The Atlanta Opera, 372 NLRB 95 (2023), that makeup artists, wig artists, and hairstylists were improperly classified as independent contractors, rather than employees.  In doing so, the Board overruled SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) in favor of the analysis set out by the Obama Board.  Rather than focusing on the locus of entrepreneurial opportunity – as the Trump Board directed – the Atlanta Opera decision reinstates a muddled analysis that requires the Board to analyze a host of enumerated (and non-enumerated) factors when determining whether a given worker is an independent contractor.  While this decision ultimately throws some additional confusion into the independent contractor analysis, entrepreneurial opportunity still remains a factor in the test.  On that basis, it is more likely than not that this case will have little practical impact.

By way of brief background, in April 2021, a group of independent contractors who worked for the Atlanta Opera filed a representation petition with the NLRB.  After a hearing, the Regional Director held that the independent contractors – wig artists, makeup artists, and hairstylists who contracted with the Atlanta Opera during the fall and spring seasons – were, in fact, employees, and issued a decision and direction of election.  The Opera appealed that decision, and the Board invited briefing from amici on whether it should overturn SuperShuttle and return to the previous 2014 Obama-era standard.

Nearly two years later, the Board issued Atlanta Opera, which overruled SuperShuttle and returned to the prior standard, as it telegraphed when it invited briefing.  To level set here, and as yet another illustration of the lengths this Board will go to implement its pro-labor agenda, the Board did not even have to overturn precedent.  As Member Kaplan explained in dissent, even under SuperShuttle, these workers were improperly classified as independent contractors.  In other words, both Democrat and Republican members agreed that the workers were misclassified under SuperShuttle.  So much for judicial restraint.

In any event, the Board did what it did: whether a given worker retains “entrepreneurial opportunity” – the ability to get their own work from other clients and businesses – no longer carries outsized weight.  It is but one of a host of factors to be considered when analyzing independent contractor status, along with:

• The extent of control exercised by the employer over the worker;
• Whether or not the worker is engaged in a distinct occupation or business;
• The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
• The skill required in the particular occupation;
• Whether the employer or the worker supplies the instrumentalities, tools, and place of work for the person performing the work;
• The length of time for which the worker is employed;
• The method of payment, including whether payment is by time worked, job performed, or some other method;
• Whether or not the work is a part of the ”regular business” of the employer;
• What type of relationship the parties believe they are creating; and
• Whether the worker is or is not “in business.”

From these enumerated factors, the focus seems to have shifted slightly to whether the worker has a realistic ability to work for other companies, has proprietary or ownership interest in their work, and has control over important business decisions.

Of course, and somewhat confusingly, other “relevant” (and unlisted) factors can come into play, too.  What those are, though, has yet to be answered.

Whether this decision makes much difference is also an open question.  Given the majority and the dissent ultimately agreed that these workers were employees, it doesn’t seem it will.  Beyond that, it is unclear whether this decision will survive appellate review.  As the majority acknowledges, it is directly at odds with the D.C. Circuit Court of Appeals.  And, as with most recent decisions from this Board, we expect this one to be appealed in short order.

Ultimately, while this decision seems to have been announced with a crescendo, its impact will likely be relatively muted.  That said, employers should consider taking another look at their independent contractor agreements and arrangements in light of this ruling, and the Board’s focus on misclassification more broadly.  When doing so, employers might seek to ensure that any individuals with whom the employer contracts actually possess the opportunity for entrepreneurial gain or loss.  Along with that, employers might also review their independent contractor agreements to eliminate (or at least reduce) any reserved right of control the employer maintains over the worker’s terms and conditions of work.