NLRB Narrows Independent Contractor Definition

On June 13, 2023, in its Atlanta Opera decision,[1] the National Labor Relations Board (“NLRB”) returned to an Obama era standard for defining independent contractors. It’s now easier for the Board to classify workers as employees. 

Why does it matter?  Employees are protected under the National Labor Relation Act (“NLRA”), but independent contractors are not.  The NLRA affords employees the right to employer provided benefits, to organize unions, and to file unfair labor practice charges.

The Atlanta Opera decision overturns the Trump era SuperShuttle ruling which established the current independent contractor standard. Now, the NLRB returns to the standard it previously set in the 2014 FedEx II ruling.

More specifically, Atlanta Opera rejects the notion that “entrepreneurial opportunity” for gain or loss is the “animating principle” of an independent contractor. Instead, the Board “reaffirmed longstanding” common law factors, including, for example, the extent of employer control, level of supervision, skill required, who supplies the tools or equipment, and employment duration, among others.

No single factor is more important than others.  “Entrepreneurial opportunity” still matters, but only when “actual,” as opposed to “merely theoretical.” Additionally, the NLRB will consider whether workers conduct themselves like an independent business.

The sole Republican NLRB Member, Marvin Kaplan, disagreed with the Democratic majority.  By Kaplan’s analysis, the Trump era SuperShuttle standard was already approved by at least one federal court, meaning that the more expansive Atlanta Opera standard may not pass legal scrutiny in federal courts. 

Employers who utilize independent contractors should now reassess.  Incorrectly classifying a worker as an independent contractor creates benefits-related exposure, and opens the door to organizing and other legal challenges. 

This decision further illustrates a very clear trend we’ve seen under the Biden Administration.  Employee rights are expanding.  Employers are experiencing the opposite impact.

Mark McQueen
Connor Oldenburg, Summer Associate