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NLRB reinstates age-old independent-contractor standard
By Katherine Fechte on January 28, 2019 at 1:10 PM

Employee versus independent contractor decision, with independent contractor checkedThe National Labor Relations Board (NLRB) on Jan. 25, 2019, overturned its 2014 ruling in FedEx Home Delivery and returned to its long-standing independent-contractor standard. In affirming its reliance on the traditional common-law employment classification test, the board clarified how entrepreneurial opportunity factors into its determination of independent-contractor status.

In FedEx, the board held that drivers in the Connecticut terminal of a FedEx Ground Package Systems Inc. unit were employees and not independent contractors, saying that a wide range of factors favored employee status. In reaching that conclusion, the board modified the test for determining independent-contractor status by strictly limiting the significance of a worker’s entrepreneurial opportunity for economic gain. Specifically, the board held that it would give

weight to actual, not merely theoretical, entrepreneurial opportunity, and that it would necessarily evaluate the constraints imposed by a company on an individual’s ability to pursue this opportunity.

Now, in SuperShuttle DFW, Inc., the board concluded that franchisees of SuperShuttle at the Dallas-Fort Worth Airport are not statutory employees under the National Labor Relations Act (NLRA), but are independent contractors excluded from the NLRA’s coverage.

Importantly, the board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their almost unrestricted control over their schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain. These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the board’s decision that the franchisees are not employees. In overruling FedEx, the board concluded that it would continue to consider “all of the common-law factors in the total factual context of each case and treating no one factor (or the principle of entrepreneurial opportunity) as decisive. And where the common-law factors, considered together, demonstrate that the workers in question are afforded significant entrepreneurial opportunity, [it] will likely find independent-contractor status.”

If you have questions about the SuperShuttle decision or need help classifying your workers, please call one of the attorneys in our Employment & Labor group. In addition, franchisors with questions about how this may affect them can contact a member of our Franchising & Distribution group.

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