The NLRB Changes Course in the Employee Versus Independent Contractor Debate

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Patricia Tsipras

June 14, 2023

Yesterday, a majority of the National Labor Relations Board (Board) – comprised of the Board’s Democrats – issued a decision holding that make-up artists, wig artists, and hairstylists were employees, not independent contractors, of The Atlanta Opera, Inc.  See The Atlanta Opera, Inc. and Make-Up Artists and Hair Stylists Union, Local 798, IATSE, Case 10-RC-276292.  Classifying the workers as employees means that they are covered by the National Labor Relations Act (NLRA) and, among other things, are eligible to unionize.

In making its determination, the Board overruled precedent in SuperShuttle DFW, Inc., 367 NLRB 75 (2019), which held that “entrepreneurial opportunity … has always been at the core of the common law test” to determine a worker’s status as an employee or independent contractor.  The Board held that this approach cannot be squared with Board precedent, common law, or Supreme Court precedent because it elevates a single factor as determinative in the employee versus independent contractor analysis, when “all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.”  See NLRB v. United Insurance Co. of America, 390 U.S. 254, 258 (1968).

Instead, the Board reinstated and refined its approach in FedEx Home Delivery, 361 NLRB 610 (2014), where the Board held that the employee versus independent contractor analysis should be guided by the factors enumerated in the Restatement (Second) of Agency.  Those 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 worker 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 Board then clarified that it also would ask “whether the evidence tends to show that a putative independent contractor is, in fact, rendering services as part of an independent business.”

Though all members of the Board ruled that The Atlanta Opera workers were employees, Republican Board member Marvin Kaplan dissented from the majority’s decision to overturn SuperShuttle – a decision of which Kaplan was a part – believing that it still “provides the most effective measure for determining the important issue of whether individuals should be considered employees.”

Kaplan further noted in his dissent that the Board’s return to the FedEx standard likely will not withstand judicial review.  We shall see.