NLRB Rides the SuperShuttle Back to the Common-Law Test for Independent Contractors

Obermayer Rebmann Maxwell & Hippel LLP

On January 25, 2019, the National Labor Relations Board (NLRB) issued an opinion in SuperShuttle DFW, Inc.,[1] holding that SuperShuttle DFW franchisees are independent contractors rather than employees and therefore not permitted to unionize under the National Labor Relations Act (NLRA).

The NLRA is a federal statute enacted in 1935 that allows certain employees to bargain collectively regarding the terms and conditions of employment—something that would otherwise be illegal under federal antitrust law.  Much like a court, the NLRB issues rulings that interpret the NLRA and expand or limit the rights and protections provided by the statute.

Because the NLRA does not apply to independent contractors, the determination of which workers are employees and which employees are independent contractors can often make or break a claim before the NLRB. During the Obama era, the NLRB issued a key opinion in FedEx Home Delivery (2014),[2] stating that the independent contractor determination should be viewed through a lens of “economic dependency”—meaning that workers who are economically dependent on an employer for their livelihood are more likely to be viewed as employees rather than independent contractors.  In SuperShuttle DFW, the NLRB overruled FedEx and returned to the more employer-friendly common-law test.

The case involved a group of SuperShuttle drivers in the Dallas-Fort Worth area who attempted to unionize.  However, SuperShuttle DFW treats its drivers as franchisees.  They are required to buy a franchise from the company, provide their own vehicle, and pay their own business expenses. The company sets certain rules (which are largely dictated by the airport authority) under which franchisees must operate.  The company charges certain fees to franchisees that cover the benefits provided to them by the company, such as marketing, dispatch, and accounting.  The fees are fixed per week and are not varied based on the revenues the franchisee makes.  Franchisees are otherwise free to set their own hours of work, accept or reject rides from dispatch, and even hire additional drivers.

In finding that the SuperShuttle franchisees were independent contractors, the NLRB focused on the fact that they were afforded a large degree of discretion in making decisions that drive how much money they make—entrepreneurial opportunity for gain or loss.  In a press release announcing the decision, the NLRB pointed out that entrepreneurial opportunity plays an important role in the independent contractor determination, and that the D.C. Circuit Court of Appeals has adopted a similar analysis.

In SuperShuttle, the NLRB applied the following common law factors, which guide the independent contractor analysis:

(a) The extent of control which, by the agreement, the master may exercise over the details of the work;

(b) Whether or not the one employed is engaged in a distinct occupation or business;

(c) 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;

(d) The skill required in the particular occupation;

(e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f) The length of time for which the person is employed;

(g) The method of payment, whether by the time or by the job;

(h) Whether or not the work is part of the regular business of the employer;

(i) Whether or not the parties believe they are creating the relation of master and servant; and

(j) Whether the principal is or is not in the business.

This multi-factor test leaves a large amount of room for interpretation as to which factors weigh in each direction in a particular case and how to balance them.  However, it is clear that the NLRB is moving in a more employer-friendly direction on the independent contractor issue.  This latest decision is one of several recent NLRB decisions overruling Obama-era rulings on key labor law issues.  Practically speaking, a shift from an economic dependency analysis back to the pre-FedEx entrepreneurial opportunity analysis will result in more workers being treated as independent contractors excluded from NLRA coverage.  However, employers still need to be mindful that the determination of independent contractor status is very fact-sensitive, and the fact that workers are referred to as independent contractors (or paid like independent contractors) is not enough to ensure independent contractor status.  Employers with questions about the impact of this latest decision, or with questions about independent contractor issues, should consult with counsel with experience in this area.

[1] NLRB Case Number 16-RC-010963 (filed 7/15/2010).

[2] 361 NLRB 610.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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