On June 13, 2023, the National Labor Relations Board (the “Board” or “NLRB”) overturned another business-friendly Board decision in favor of returning to a more employee-friendly standard for determining whether a worker is an employee. or an independent contractor under the National Labor Relations Act (“NLRA”). Independent contractors are exempt from NLRA rights and protections, including the right to form and join unions.
The Chamber’s decision in The Atlanta Opera, Inc. and Makeup Artists and Hairdressers Union, Local 798, IATSE372 NLRB No. 95 (June 13, 2023) (decision here) overturned the 2019 decision on SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) and reinstated the Council’s previous standard of decision in FedEx home delivery, 361 NLRB 610 (2014) (FedEx II).
By restoring the FedEx II standard, the Board emphasized that the review as to whether a worker was an independent contractor or employee would still be guided by the common law factors of the Agency (Second) Reformulation, Section 220, but also that “all incidents of the relationship must be assessed and heavy without any factor being decisive”. This is in stark contrast to the super shuttle standard, where the Board focused on a worker’s “business opportunity” as an animating principle for determining independent contractor status, rather than evaluating all common law factors equally.
In The Atlanta Opera, The Makeup Artists and Hairdressers Union, affiliated with IATSE, has filed a petition to represent the makeup artists, wigs and hairdressers (collectively the “stylists”) who have worked with the Atlanta Opera on its productions. The employer, the Atlanta Opera, stated that the stylists were independent contractors and therefore not covered by the NLRA.
On June 17, 2021, the Acting Regional Director issued a Decision and Election Direction concluding that the stylists were statutory employees in accordance with the Act. The employer filed a request for a review of the Decision of the Interim Regional Director and Director of Election, which was granted by the Board.
The Board used the employer’s request to review the Acting Regional Director’s Election Decision and Direction as an opportunity to potentially override super shuttle and guest briefing in order to determine the following:
- If the Board adheres to the independent contractor standard in super shuttle?
- If not, which standard should replace it? If the Board returns to default in FedEx IIin full or with modifications?
The Council ended up repealing super shuttleand re-established the standard and approach of its previous decision in FedEx II. Both decisions utilize the same common law factors, but differ in their approach to assessing how workers’ “entrepreneurial opportunity” affects the overall analysis of common law factors.
The Council determined that super shuttle could not be reconciled with common law agency principles, or Supreme Court or Council precedent, reasoning that neither had elevated or viewed “business opportunity” as a superfactor to guide the analysis of the overall effect of common law factors .
Instead, the Board re-established the standard that, in assessing independent contractor status, the Board will be guided by the non-exhaustive common law factors enumerated in the Agency (Second) Reformulation, Section 220 and will assess “all incidents of the ” with “no one likes to be decisive.”
The Board also explained that the proper use of “business opportunity” in the analysis is to view, in the context of weighing all relevant and traditional common law factors, whether the evidence tends to show that the alleged independent contractor is, in fact, providing services as part of an independent business and that the Board will only give weight to the actual business opportunity, not theory or potential.
With respect to the stylists in question, the Board concluded that most common law factors pointed to official status, including:
- The extent of control by the employer – In The Atlanta Opera, the production director controlled the details of the stylists’ work;
- Whether the work is generally done under the direction of the employer or by an unsupervised specialist – In The Atlanta Opera, the production director gave the stylists continuous feedback on their work;
- Whether the employer or the individual provides instruments, tools and workplace – In The Atlanta Opera, the employer provided all instruments, tools and workplaces;
- Payment method – In The Atlanta Opera, stylists were paid hourly with a fixed number of hours, and the employer could unilaterally determine whether overtime was required;
- Whether or not the work forms part of the employer’s regular business – In The Atlanta Opera, the stylists’ work was an integral part of the employer’s business of presenting opera productions to clients; It is
- Whether or not the principal is in business – In The Atlanta Opera, the employer is in business.
Although three factors—different occupation, skill, and tenure—weighed in favor of independent contractor status, they did not outweigh the factors that favored employee status. Finally, the Board considered whether the evidence demonstrated that the stylists provided services to the employer as part of their own independent business and determined that no, as the stylists had no proprietary interest in their work, they could not assign their positions, or hire replacements. , the employer made all the business decisions, and during productions there was no opportunity for a stylist to employ entrepreneurial strategies that might result in more income.
In another shift back to more employee and union friendly standards, it is likely that more workers will now fall under the employee rather than independent contractor classification for NLRA purposes. As President McFerran stated in the majority opinion of the The Atlanta Operaone of the intentions to return FedEx II is to avoid a broader exclusion from the NLRA’s statutory coverage than Congress intended. Thus, it will be imperative for employers to review any current agreements and employment arrangements they may have with contractors and be aware of any future new employment arrangements with contractors.