Labor & Employment Law Daily NLRB says misclassifying workers as independent contractors doesn’t violate NLRA
Thursday, August 29, 2019

NLRB says misclassifying workers as independent contractors doesn’t violate NLRA

By Ronald Miller, J.D.

The employer here failed to establish that its drivers were independent contractors under the NLRA, but communicating to workers the opinion that they are independent contractors, even if mistaken, does not in itself violate the Act.

Employers do not violate the NLRA solely by misclassifying employees as independent contractors, ruled a divided four-member panel of the NLRB. The Board held that an employer’s communication to its workers of its opinion that they are independent contractors does not, standing alone, violate the Act if that opinion turns out to be mistaken. According to the Board, such communication does not inherently threaten those employees with termination or other adverse action if they engage in activities protected by the NLRA, nor does it communicate that it would be futile for them to engage in such activities. However, the Board found the workers in this case were statutory employees, and that the employer violated the Act by discharging one of them. Member Lauren McFerran filed a separate opinion dissenting from that portion of the decision holding that misclassification is not a separate violation (Velox Express, Inc., August 29, 2019).

In Velox Express, Inc. (15-CA-184006) an administrative law judge determined that Velox Express, an Indiana-based company that performs medical specimen pickups, retail deliveries, home infusions, and long-term care pharmacy work, misclassified its drivers as independent contractors and restrained them from exercising their right to unionize. In asserting an exception to the decision, Velox argued that the mere misclassification as an independent contractor, without more, is not a violation of Section 8(a)(1).

The Board requested briefing in this case on the issue of whether employee misclassifications should be a violation of the NLRA. The General Counsel, the employer, and the Charging Party each filed a brief; 13 additional briefs were received from 28 amici.

Drivers were employees. In SuperShuttle DWF, Inc., the Board reaffirmed its application of the traditional common-law standard for determining whether an individual is a statutory employee or an independent contractor. A divided Board concluded in that decision that airport shuttle-driver franchisees were independent contractors and thus, were not statutory employees within the meaning of section 2(3) of the NLRA, which excludes independent contractors from its reach. Its determination turned on the fact that the drivers had considerable entrepreneurial opportunity—which, under the “clarified” test adopted in SuperShuttle, is the primary determinant of independent contractor status under the Act.

Applying its recent decision in SuperShuttle here, the Board found that the drivers were employees, not independent contractors, and thus were protected by the NLRA. Based on that determination, it held that the employer violated the NLRA when it discharged one of these employees for bringing to management’s attention group complaints about the way the employer was treating its workers.

The Board majority held, however, that the employer’s misclassification of its employees as independent contractors was not a separate violation of the Act.

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