National Labor Relations Board Modifies Independent Contractor Standard under National Labor Relations Act

The National Labor Relations Board (NLRB) announced a decision that adopted a standard for determining if workers are employees or independent contractors for the purposes of the National Labor Relations Act (NLRA) that was adopted in a 2014 decision by the NLRB and overruled a decision in 2019 that gave added weight to whether the workers had an entrepreneurial opportunity.

June 13, 2023

In a decision issued today in The Atlanta Opera, Inc., the Board returned to the 2014 FedEx Home Delivery (FedEx II)standard for determining independent contractor status under the National Labor Relations Act (the Act), and overruled SuperShuttle (2019). In applying the FedEx II standard, the Board found that the makeup artists, wig artists, and hairstylists who work at the Atlanta Opera—had filed an election petition with the Board seeking union representation—are not independent contractors, excluded from the Act, but rather are covered employees.

In its decision, the Board reaffirmed longstanding principles—consistent with the instructions of the Supreme Court—and explained that its independent-contractor analysis will be guided by a list of common-law factors. The Board expressly rejected the holding of the SuperShuttle Board that entrepreneurial opportunity for gain or loss should be the “animating principle” of the independent-contractor test.

The Boardfurther explained that entrepreneurial opportunity would be taken into account, along with the traditional common-law factors, by asking whether the evidence tends to show that a supposed independent contractor is, in fact, rendering services as part of an independent business.

In reviewing the facts of this case and applying the FedEx II standard in Atlanta Opera, the Board determined that the majority of the traditional common-law factors point toward employee status.  The Board also determined that the evidence did not show that the stylists rendered services as part of their own independent businesses.

“In today’s decision, the Board returns to the independent contractor test articulated in FedEx II, and reaffirms the Board’s commitment to the core common-law principles that the Supreme Court has determined should guide the Board’s consideration of questions involving employee status,” said Chairman Lauren McFerran. “Applying this clear standard will ensure that workers who seek to organize or exercise their rights under the National Labor Relations Act are not improperly excluded from its protections.”

In December 2021, the Board invited parties and amici to submit briefs addressing whether the Board should reconsider its standard for determining the independent contractor status of workers.

Members Wilcox and Prouty joined Chairman McFerran in issuing the decision. Member Kaplan dissented from the overruling of SuperShuttle,but concurred in finding that the stylists were employees, not independent contractors.

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