NLRB ruling is a win for the gig economy

Constangy, Brooks, Smith & Prophete, LLP

Constangy, Brooks, Smith & Prophete, LLP

A welcome decision for companies that use contract labor.

The National Labor Relations Board has recently reaffirmed "entrepreneurial opportunity" as an important factor in weighing independent contractor status.

The case, SuperShuttle DFW, Inc., involved shuttle-van drivers who were attempting to organize at the Dallas-Fort Worth Airport. The NLRB found that the drivers were not statutory employees under the National Labor Relations Act but independent contractors.

Independent contractors are not covered by the NLRA. 

For more than 50 years, the Board and the courts have revisited and refined the proper application of the common law factors to the independent contractor analysis.

Traditionally, to determine whether a worker is an employee or an independent contractor, the Board applied and considered all of the relevant common law factors, including whether the parties believed they were creating a master-servant relationship, the extent of the company's control over the details of the work, the extent of supervision by the company, and who supplied the "instrumentalities" (for example, equipment, tools, and supplies) for doing the work. 

However, in 2014, the Board under President Obama adopted an "economic realities" analysis that arguably overemphasized the company's "right to control" the work. The Trump Board in SuperShuttle returned to the traditional common law analysis. As the Board explained, this does not mean that right to control is not relevant:

Indeed, employer control and entrepreneurial opportunity are opposite sides of the same coin: in general, the more control, the less scope for entrepreneurial initiative, and vice versa. Moreover, we do not hold that the Board must mechanically apply the entrepreneurial opportunity principle to each common-law factor in every case. Instead, the Board may evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate.

In concluding that the SuperShuttle van drivers were not employees, the Board took into consideration, among other things, that the drivers leased or owned their work vans, that they were "entitled to the money they earn for completing the assignments that they select," and that they had nearly unfettered control over their daily work schedules and working conditions. Thus, the Board found, the drivers had significant entrepreneurial opportunity for economic gain.

The SuperShuttle decision is good news for app-based ride-hailing companies, such as Uber and Lyft, and other businesses in the “gig economy.” However, two cautions are in order:

  • Although the traditional test has returned, companies who wish to maintain valid independent contractor relationships should review their worker classifications to assess whether the factors assessed by the Board lean toward independent contractor status and evince entrepreneurial opportunity. No one factor controls this test, but, post-SuperShuttle, the Board will consider each element individually through "the prism of entrepreneurial opportunity."
  • The SuperShuttle ruling is limited to the NLRA. It does not, for example, apply to claims alleged under federal or state wage and hour laws, state wage payment laws, unemployment insurance and workers’ compensation laws, or federal law governing retirement and employee welfare benefits.

Interested in more on this topic? My colleague David Phippen has summarized the SuperShuttle decision in this recent bulletin. For "labor law 101" and a discussion of the way the NLRB's positions shift with each presidential administration, you will enjoy our latest ConstangyTV's Close-Up on Workplace Law ("Labor law for non-union employers, Part One").

Image Credits: From flickr, Creative Commons license: SuperShuttle van by kennejima, Uber interface by Mapbox.

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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