By Dave Strausfeld, J.D. The NLRB misapplied the law of agency when it determined that local freelance stagehands were “employees” of a referral service. The stagehands were independent contractors, the Eleventh Circuit held, as shown by the small degree of control that the referral service exercised over them as well as by other factors, including the failure to withhold their taxes, the absence of benefits, the fact that the stagehands provided their own tools, and their stipulation upon hiring that they were independent contractors. The appeals court granted the referral service’s petition for review and denied the Board’s cross-petition for enforcement of its order finding that the respondent had unlawfully refused to bargain with a union that had been improperly certified (Crew One Productions, Inc. v. NLRB, February 3, 2016, Pryor, W.). Referral service. The stagehands worked through Crew One Productions, a company that refers stagehands to event producers for concerts, sporting events, trade shows, and other events in the Atlanta area. Event producers ordinarily contract with Crew One for a certain number of stagehands and pay the company an hourly rate for each stagehand. IN turn, Crew One refers interested stagehands from its database. To be included in the database, stagehands must complete a questionnaire about their skills and availability. After submitting the questionnaire, most of the stagehands attend a brief orientation at the Crew One office, where they receive a packet of information but no training or testing. At orientation, stagehands must also sign an agreement acknowledging that they are independent contractors. On the day of an event, stagehands report 30 minutes early so that a Crew One project coordinator can confirm attendance for payment purposes and assign them to a particular department, such as rigging or carpentry. After work begins, stagehands report exclusively to tour personnel, except that they must sign out with Crew One to record their departure time. The International Alliance of Theatrical Stage Employees (IATSE) petitioned the NLRB to represent the Crew One stagehands. The Board determined that the stagehands were employees, directed an election, and ultimately certified IATSE as the stagehands’ bargaining representative. Crew One refused to negotiate with the union, and the Board found the company unlawfully refused to bargain. The key issue on appeal was whether the stagehands were statutory employees under the NLRA or independent contractors. Agency principles. To answer this question, the Eleventh Circuit looked to the common law of agency, especially its most important factor: whether Crew One had the right to exercise control over the stagehands. The answer appeared to be “no.” Although the stagehands were required to check in and check out with Crew One at event sites, any realistic control of their work was exercised by the event producers and touring crews at each individual event. In fact, Crew One lacked the expertise to direct the stagehands in their work for any particular client. Also important to the right-of-control analysis was the fact that the stagehands were free to reject work offered by Crew One and were free to accept work from other labor providers, giving the stagehands an entrepreneurial stake in their work. While the Board viewed this simply as a consequence of the part-time nature of stagehand work, the appeals court disagreed, declaring that “nothing in the nature of part-time work dictates that Crew One must allow the stagehands to decline jobs or use competing referral services.” Failure to withhold taxes. The fact that Crew One did not withhold taxes from the stagehands’ paychecks also bolstered the conclusion that they were not employees of the referral service. A company’s failure to deduct Social Security or income taxes from a worker’s paycheck “is a strong indication of the absence of employee status”—at least in the Eleventh Circuit. Other circuits give this factor less weight, the court recognized, but based on circuit precedent, the Board should have assigned it more importance than it did. Independent contractor agreements. Also, the stagehands had signed independent contractor agreements. While the Board discounted the significance of these agreements because Crew One had insisted on them, “[t]his theory is not a valid defense to the formation of the agreements,” the appeals court emphasized. If the agreements had been a product of fraud or duress, it would have been correct to disregard them, but the Board made no such finding. Therefore, the fact that the stagehands signed the independent contractor agreements should have been given more weight. Ability to negotiate pay. The Board also made a “fundamental error” in taking into account that the stagehands were paid a standardized rate of pay. However, the fact that the stagehands could not negotiate their pay was merely indicative of relative bargaining power, not an employee-employer relationship, the court explained. The Board should not have treated an imbalance in bargaining power as evidence that the stagehands were employees. Nature of the business. The very nature of Crew One’s business further supported a determination that the stagehands were independent contractors, the court observed. Crew One was in the business of referring stagehands to event producers, but Crew One did not perform stagehand work itself. Other factors. A variety of other factors suggested independent contractor status, including that the stagehands provided their own basic supplies on the jobs, and received no benefits. The only factor that weighed in favor of the opposite result was the fact that the stagehands were paid by the hour. This factor was outweighed by the totality of the other factors, the court found, especially the lack of control. Finding the stagehands were independent contractors, the appeals court vacated the Board’s decision to the contrary.
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