Employer misclassification of workers as independent contractors to avoid laws and regulations that protect employees but not independent contractors is a widespread problem. In SuperShuttle DFW, Inc.,[1] the Trump Board reinstated a common-law standard that makes it easier for employers to classify workers as independent contractors under the Act. In doing so, the Board overruled the Obama Board’s decision in FedEx Home Delivery,[2] which refined the standard by limiting the significance of a worker’s entrepreneurial opportunity for economic gain.
The Board has long applied a common-law analysis for determining independent contractor status. Among other things, the test considers: the extent of control the employer may exercise over the details of the work; whether the employer or the worker supplies the instrumentalities, tools, and the place of work; the length of time for which the worker is employed; and whether the work is part of the regular business of the employer. An additional factor the Board has considered is whether the workers have significant entrepreneurial opportunity for gain or loss. In FedEx Home, the Obama Board clarified that the entrepreneurial opportunity analysis should only be considered where the evidence shows that the putative independent contractor is rendering services as part of an independent business.
SuperShuttle DFW, Inc. involved 88 shuttle van drivers who, up until 2005, had been classified as employees by the company. In 2005, however, the company converted to a franchise model, and the drivers were designated franchisees exempt from the protections of the Act. The Trump Board in SuperShuttle DFW, Inc. rejected the standard in FedEx Home because it diminished the significance of entrepreneurial opportunity and overemphasized the significance of the “right to control” factors – i.e., factors which make it easier for workers to show employee status. The Board held that any of the common-law factors may be evaluated through the prism of entrepreneurial opportunity when the factual circumstances of a case warrant such an evaluation.
Applying this approach, the Board found that the
drivers’ leasing or ownership of their work vans, their method of compensation,
and their control over their daily work schedules provided the drivers with
significant entrepreneurial opportunity for economic gain. As such, the Board held that SuperShuttle’s
driver-franchisees were independent contractors excluded from the Act’s
coverage.
[1] SuperShuttle DFW, Inc., 367 NLRB No. 75, 2019 LRRM (BNA) 24595 (Jan. 25, 2019).
[2] FedEx Home Delivery, 361 NLRB 610, 201 LRRM (BNA) 1050 (2014).