United States: NLRB General Counsel Seeks To Regulate And Target Employers With Independent Contractors

Seyfarth Synopsis: NLRB General Counsel releases an Advice Memorandum finding that the misclassification of independent contractors amounts to a standalone violation of Section 8(a)(1) of the NLRA.

On August 26, 2016, Richard Griffin, the General Counsel of the National Labor Relations Board ("NLRB"), released an Advice Memorandum outlining his legal theory that the misclassification of employees as independent contractors constitutes a standalone violation of Section 8(a)(1) of the National Labor Relations Act ("NLRA") because, in his view, the misclassification interferes with and restrains the exercise of Section 7 rights.¹

In Pac. 9 Transp., Inc., the Employer used independent contractor drivers to perform services at the ports of Los Angeles and Long Beach. In late 2012, the International Brotherhood of Teamsters began a "non-traditional" organizing campaign of the drivers, and as part of the campaign began filing individual wage and hour claims with the California State Labor Commissioner on behalf of drivers, claiming that the Company had misclassified them as independent contractors. On November 13, 2013, the Teamsters filed an unfair labor practice charge against the Company (21-CA-116403), alleging that the Employer unlawfully threatened and interrogated certain drivers. In response to the charge, the Company argued that the Region lacked jurisdiction because the drivers were independent contractors. The Region dismissed this argument and determined that the drivers were statutory employees, and ultimately concluded that the Company had violated the NLRA.

On April 24, 2015, the Teamsters filed another charge (21-CA-150875), alleging that the Company's purported misclassification of its drivers, by itself, violated Section 8(a)(1). The Advice Memo regarding this charge concludes that, "the Region should issue a Section 8(a)(1) complaint alleging that the Employer's misclassification of its employees as independent contractors interfered with and restrained employees in the exercise of their Section 7 rights."

As we discussed in a previous blog post, the General Counsel has recently focused on misclassification issues. While this Advice Memo focuses on a single case, it appears that the General Counsel seeks to apply his theory more broadly and involve the Board in other disputes regarding independent contractors. And the extraordinary remedy suggested by the General Counsel – which is contained in a closing footnote – instructs the Region to seek an order requiring that the Employer stop referring to the drivers as independent contractors, and "require that the Employer take affirmative action to rescind any portions of its Agreements with its drivers that purport to classify them as independent contractors and to post the appropriate notice." In other words, the General Counsel of the NLRB seeks to expand the purview of labor policy to dictate the worker classification decisions of employers.

This novel theory will surely be challenged. The very premise of the General Counsel's determination that a mistaken classification decision violates Section 8(a)(1) is tenuous and untested. And even if a court agrees with this concept, Board action is ripe for a preemption challenge, at the very least regarding violations under the Fair Labor Standards Act.

We'll keep you posted on future developments on this important issue.

Footnotes

1 The Advice Memorandum was issued on December 18, 2015, but was not publically released until the underlying unfair labor practice was resolved.

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