Last week, yet another decision by a governmental agency chipped away at an employer's ability to legally classify workers as independent contractors. In Atlanta Opera, Inc. and Make-Up Artists and Hair Stylists Union, Local 798, IATSE, the National Labor Relations Board (NLRB) overruled a decision it issued in 2019 in SuperShuttle DFW, Inc, when a majority of the NLRB's members had been appointed by then-President Trump. In its newest iteration, the NLRB reinstated the standard used to evaluate independent contractors versus employees, which existed prior to its 2014 decision in a case known as FedEx II. Readers who closely follow the law of labor relations know the NLRB regularly flip-flops on its precedents, as the composition of the five member NLRB changes to reflect the political party of the person occupying the White House.
The specific issue in Atlantic Opera was to determine if "Stylists" - who are the makeup artists, wig artists, and hairstylists who are needed to produce an operatic performance - should be considered employees. Historically, the Atlanta Opera classified Stylists as independent contractors, and the Opera used this classification as a means to prevent Stylists from seeking to unionize, as the National Labor Relations Act (the "Act") specifically excludes independent contractors from the definition of employee. Therefore, independent contractors cannot organize or join a union under the Act.
In Atlanta Opera, the NLRB returned to control over the worker as the primary factor and held that the proper analysis for determining contractor status was to carefully balance a number of distinct factors that readers may recognize from other legal contexts. These factors include:
- The extent of control which, by the agreement, the master may exercise over the details of the work;
- Whether or not the one employed is engaged in a distinct occupation or business;
- The kind of occupation, with reference to 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 tools and the place of work for the person doing the work;
- The length of time for which the person is engaged;
- 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; and
- Whether or not the parties believe they are creating the relation of master and servant.
Under the Trump era SuperShuttle case, a person's entrepreneurial opportunity, meaning the ability to make a profit, was held to predominate over all the other factors. The new decision rejects this concept and forces an employer to look at all of the above factors. Using these factors, the NLRB concluded Stylists were in fact employees under the Act and could form a union.
In light of this decision, managers and businesspeople who previously thought "hey, let's just make them an independent contractor!" run the risk of violating not only the NLRA but a multitude other employment-related laws that are implicated by this issue. Rather, employers must carefully weigh and analyze all of the factors to determine whether it is proper to make someone an independent contractor. And, the NLRB will be singing an encore on this topic. According to the Office of Management and Budget, the NLRB's long-anticipated regulations on independent contractors are currently scheduled to be finalized in August 2023.
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