Viewpoint: NLRB targets misclassification of independent contractors

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The National Labor Relations Board (NLRB) General Counsel has set his sights on the misclassification of independent contractors under the National Labor Relations Act (NLRA). Significantly, the initial target for implementing this new enforcement strategy was a group of transportation, logistics and brokerage affiliates. The Attorney General recently filed a lawsuit against these affiliated transportation companies, alleging they were joint employers who violated the NLRA by wrongly classifying the drivers as independent contractors, rather than employee-drivers. , and engaging in other related violations.

Background

As readers may recall, a recent legal commentary article explained how, in December 2021, the NLRB sought public comment on its analysis of independent contractor status under the NLRA. Many businesses, including many of our readers, use independent contractors. Properly classified independent contractors are exempt from coverage of most federal employment laws, including the NLRA and the Fair Labor Standards Act (FLSA), because these workers are not employees under the statutes. Therefore, independent contractors are not covered by the NLRA.

The Trump-era NLRB overturned the earlier Obama-era standard for determining when a worker is an independent contractor and reverted to a more balanced standard for businesses. This current standard considers a variety of factors to assess whether a worker is an independent contractor, such as the degree of control a business has over a worker, the level of skill needed for the job, and the method of payment. This standard makes it easier for employers to classify workers as independent contractors under the NLRA. It’s highly likely that the Biden-era NLRB will seek to change the current norm. In doing so, it will likely adopt a harder test for companies to pass by classifying workers as independent contractors, like the ABC test, for example. It follows that any such new standard will likely significantly increase the potential likelihood of gaining employee status.

At the 2022 TCA convention in Las Vegas last month, a session was conducted on this topic. The presentation discussed the Biden administration’s pro-labor push, including in the area of ​​misclassification of independent contractors, involving both the NLRB and the Department of Labor (DOL), which administers and enforces the FLSA . The Biden administration has a stated goal of being more union-friendly and aggressive, resulting in a more radical overall approach. President Biden has previously proclaimed to organized labor that he’s “going to be the strongest Labor president you’ve ever had.”

The previously announced NLRB/DOL partnership to work together in a joint effort to address issues, including the misclassification of independent contractors, sends a clear message. This joint partnership program will continue to be implemented and carried out as more and more related developments come out of the NLRB and DOL. The issuance of this new complaint by the General Counsel of the NLRB is a sure sign of the Biden administration’s commitment to follow this path. It also shows that the Advocate General is not just waiting for a new standard to be otherwise implemented under the NLRA.

Advocate General’s Complaint

The complaint was filed on the authority of the NLRB’s new general counsel, Jennifer Abruzzo, who was appointed by President Biden. The complaint alleges that the employer and its affiliates violated section 8(a)(1) of the NLRA by improperly classifying the drivers as independent contractors. The Complaint further alleges that these entities also violated Sections 8(a)(1) and 8(a)(3) by engaging in other activities in violation of workers’ rights under Section 7 of the NLRA, such as questioning a driver about his union activities and retaliation against the drivers for helping the Teamsters Union seek to unionize the drivers.

The complaint seeks an affirmative order that the alleged co-employers reclassify their independent contractor drivers as employees, and further seeks compensation for any harm suffered by the workers, including being compensated for direct and foreseeable consequential damage, following the erroneous classification as self-employed. contractors and other related violations.

It appears that the purpose of this complaint is to overturn an earlier NLRB decision and replace it with a more liberal decision. The previous NLRB decision ruled that a company‘s act of misclassifying drivers as independent contractors is not, on its own, a violation of the NLRA. In addition, the NLRB’s previous decision also declined to issue an order directing the employer to reclassify drivers as employees, but this new complaint specifically targets an order reclassifying independent contractors and making them whole.

Notably, the complaint does not contain any specific allegation regarding factors relating to misclassification, which may constitute grounds for dismissal. The absence of factual allegations, however, is evidence of the Attorney General’s objective to create a stand-alone violation of the NLRA as a matter of law, apparently regardless of whether the company has a good faith belief that workers are properly classified.

Take away

Ultimately, this new NLRB complaint is further evidence of the ongoing ideological shift within the Biden-era Council and other federal agencies. Again, at least for now, in the words of Bob Dylan “The Times They Are a-Changin”. This complaint is only part of the first steps in a long series of expected aggressive actions that the Biden administration and its federal agencies, including the DOL and the NLRB, are pursuing and will continue to pursue. Employers should continue to monitor developments in this area as we are only at the beginning of these various legal developments.

A. Eddie Wayland is a partner at the law firm King & Ballow. You can reach Mr. Wayland at (615) 726-5430 or [email protected] The foregoing materials, discussions and commentaries have been excerpted from statutes, court rulings and administrative rulings and should not be construed as legal advice on specific situations or topics.

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