United States: NLRB Issues A Complaint Alleging That Misclassification Of Independent Contractors Is An Unfair Labor Practice: Another Front On Which To Wage The Independent Contractor War

The Los Angeles office of the National Labor Relations Board ("NLRB") issued a Complaint based on an unfair labor practices charge brought by the International Brotherhood of Teamsters ("Teamsters") against Intermodal Bridge Transport, a California company in the logistics and transport business.  The original charge was filed in August of 2015 and amended twice since.

The Complaint, scheduled to be heard by an Administrative Law Judge in June, alleges, among other things, that the employer's classification of its delivery drivers as independent contractors constitutes an unfair labor practice under Section 8(a)(1) of the National Labor Relations Act (the "Act"). The argument is based on the claim that misclassification inhibits individuals who would otherwise be employees from engaging in their Section 7 rights to concerted activity including unionizing.

Of particular interest is the fact that this action appears to be based on the advice provided in Memorandum GC 16-01 issued by the NLRB's General Counsel on March 22, 2016.  There, the General Counsel directed Regional Directors and others in charge of enforcing offices to prioritize certain "cases that involve the General Counsel’s initiatives or policy concerns."  Among those listed are "cases involving the question of whether the misclassification of employees as independent contractors violates Section 8(a)(1)."

For companies which utilize the services of independent contractors, this action presents one more potential front on which the misclassification war may be waged.  This is in addition to state and federal agencies which include, the United States Department of Labor, the Internal Revenue Service, state departments of labor and state unemployment offices.  As we have long stated, be wary of classifying workers as independent contractors; the tests are difficult to meet, and the penalties are severe.

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