On June 13, 2023, the National Labor Relations Board (NLRB) reconsidered its standard when determining whether workers are covered employees under the National Labor Relations Act or, instead, are independent contractors excluded from such coverage. In The Atlanta Opera, Inc. and Make-Up Artists and Hair Stylists Union Local 798, the NLRB reinstated its 2014 independent-contractor standard, holding that “entrepreneurial opportunity” is not the animating factor of the independent-contractor test.
The NLRB concluded it would restore the standard as announced in its 2014 FedEx II decision. This standard involves an independent-contractor inquiry that is guided by a non-exhaustive list of common-law factors, including factors such as the extent of the employer’s control over the worker, the worker’s skill, and whether the work is part of the regular business of the employer. When weighing these common-law factors, the NLRB explained, entrepreneurial opportunity should be analyzed by considering whether “evidence tends to show that the putative independent contractor is, in fact, rendering services as part of an independent business.” The NLRA further noted that it would “give weight only to actual (not merely theoretical) entrepreneurial opportunity, and that it should necessarily evaluate the constraints imposed by a company on the individual’s ability to pursue this opportunity.”
Adhering to FedEx II, the NLRB overruled its 2019 independent-contractor standard announced in SuperShuttle DFW, reasoning that the SuperShuttle DFW approach could not be squared with NLRB precedent, with the common law of agency, or with Supreme Court precedent. The SuperShuttle DFW standard originally held that entrepreneurial opportunity was “a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain” and was “the animating principle of the test.” In expressly rejecting this approach, the NLRB stated that “any approach that purports to elevate a single factor or designate an animating principle necessarily runs counter to the Supreme Court’s admonition that ‘there is no shorthand formula or magic phrase that can be applied to find the answer, but all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.’” For these reasons, the NLRB concluded it would return to its FedEx II independent-contractor standard.
In applying this adopted standard, the NLRB concluded that the workers at issue were employees under the National Labor Relations Act. This ruling is important because it broadens the scope of workers classified as covered employees and therefore protected by the National Labor Relations Act. For assistance or answers to questions about this legal insight, please contact the authors or any member of the Steptoe & Johnson Labor Relations Team.
The authors thank Chase Riggs, summer associate, for his contributions to this article.
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