In 2019, the National Labor Relations Board issued its decision in the SuperShuttle DFW, Inc.
case, emphasizing the importance of entrepreneurial opportunity in
applying the traditional multi-factor test to determine whether workers
should be classified as employees or independent contractors. 

That
decision reversed the precedent, favoring classification as employees
and, therefore, unionization. Over the summer, the NLRB once again
reversed course, demonstrating a clear preference of the current
administration toward potential unionization. 

In a separate case,
makeup artists, wig artists, and hair stylists at the Atlanta Opera
filed an election petition with the NLRB seeking union representation.
Knowing that the National Labor Relations Act only provides rights to
employees, the Atlanta Opera argued that the claimants were independent
contractors rather than employees and could not seek union
representation. 

“The Atlanta Opera decision from the NLRB did acknowledge that evidence of an entrepreneurial opportunity remains part of the analysis, with a focus on whether the worker is really operating an independent business.”

The
NLRB held that the traditional multi-factor test must be applied and
that entrepreneurship would no longer be viewed as an “animating
principle.” Instead, the Board will evaluate whether workers are
correctly classified as independent contractors in light of the
traditional common law principles, with no one factor being
decisive. The 10 factors the NLRB will consider when determining whether
workers are independent contractors or employees entitled to the
protections afforded under the NLRA are as follows: 

• The extent of control which, by the agreement, the master may exercise the details over the work

• Whether or not the one employed is engaged in a distinct occupation or business

• The
  kind of occupation, regarding whether, in the locality, the work is
  usually done under the direction of the employer or by a specialist
  without supervision

• The skill required in the particular occupation

• Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work

• The length of time for which the person is employed

• The method of payment, whether by the time or by the job

• Whether or not the work is a part of the regular business of the employer

• Whether or not the parties believe they are creating the relation of master and servant

• Whether the principal is or is not in business

The
Atlanta Opera decision from the NLRB acknowledged that evidence of an
entrepreneurial opportunity remains part of the analysis, focusing on
whether the worker is operating an independent business. The NLRB’s
decision noted that factors to be considered when determining
entrepreneurial opportunity include the following:

“Employers need to be aware of the standards that are now being applied, especially in light of the emphasis being demonstrated by the Board and its general counsel. Attention should be paid to whether workers are properly classified as independent contractors, and adjustments should be made where necessary.”

In
the Atlanta Opera case, based on considering all the factors provided
above, the NLRB determined that the stylists were employees and not
independent contractors and therefore had the right to unionize.

This
decision continues the pattern of NLRB decisions adhering to the
political preferences of the particular administration in power. Note,
however, that NLRB decisions are subject to appeal. The D.C. Circuit,
which has jurisdiction over NLRB decisions, has previously ruled
against the standard applied in this case on more than one occasion, as
it favors the emphasis on entrepreneurial opportunity used in the SuperShuttle case. 

Note also that the dissent in the Atlanta Opera case argued that there was no need to overturn the SuperShuttle standard because the facts were such that the Atlanta Opera workers would be found to be employees even under that standard.  

We expect litigation on these issues to continue. 

In
the meantime, employers need to be aware of the standards now being
applied, especially in light of the emphasis by the Board and its
general counsel. Attention should be paid to whether workers are
correctly classified as independent contractors, and adjustments should
be made where necessary. 

As we noted in our update in 2019 when the SuperShuttle
case was announced, these decisions do not necessarily impact the U.S.
Department of Labor and income tax issues related to worker
classification; the Atlanta Opera decision does indicate the
emphasis of the administration in general, which is clearly in favor of
union employees and against employers’ business interests.