Can you prove your independent contractors are employees?
On June 13, 2023, the National Labor Relations Board (the “Board”) issued a decision modifying the independent contractor standard under the National Labor Relations Act (the “Act”). The modified standard may make it more difficult for employers to establish that its workers are independent contractors, rather than employees, and therefore, excluded from the Act’s protections.
In its The Atlanta Opera, Inc. decision, the Board ruled that the Atlanta Opera’s makeup artists, hair stylists, and wig stylists were employees, not independent contractors. In doing so, the Board overruled its 2019 independent contractor standard and reverted back to its 2014 standard (i.e., the FedEx II standard). The FedEx II standard analyzes common law factors, and “entrepreneurial opportunity,” -- whether the worker is “rendering services as part of an independent business” -- which weighs in favor of finding independent contractor status. Notably, no single factor is considered decisive under the FedEx II standard unlike the old 2019 standard which gave “entrepreneurial opportunity” determinative weight.
The Board’s June 13, 2023 decision is another example of the gig economy being scrutinized. In September 2022, the U.S. Federal Trade Commission issued a “Policy Statement on Enforcement Related to Gig Work” outlining the issues facing gig workers and its asserted authority to enforce competition and consumer protection laws, irrespective of how employers choose to classify those who perform gig work. Additionally, on June 9, 2023, the U.S. Department of Labor (“DOL”) stated that its Independent Contractor Final Rule will likely be published in October 2023. This Final Rule would rescind DOL’s 2021 rule which places an emphasize on two factors -- (1) control over the work; and (2) opportunity for profit or loss -- to establish independent contractor status and, revert back to a totality of the circumstances analysis, similar to what the Board did in its June 13, 2023 decision.
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