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Independent Contractors

At the end of 2017, the NLRB’s General Counsel Peter Robb took steps to undo actions undertaken by his predecessor, Richard Griffin, to drastically change the interpretation of independent contractor status in the workplace. Robb rescinded an August 2016 Advice Memorandum, in which Griffin took an overly expansive view of who is an employee under the National Labor Relations Act (NLRA) and, in doing so, called into question the legitimacy of many independent contractor relationships. Importantly, Griffin’s 2016 memo relied on a case that has since been overturned by a US Court of Appeals. The Griffin memo also drastically deviated from the Board’s longstanding position by claiming for the first time in the agency’s 80-plus-year history that the unintentional misclassification of workers was in and of itself a violation of the NLRA’s Section 7 right to act collectively.

Additionally, on December 1, 2017, Robb issued Memorandum GC 18-02 instructing Regional Offices to submit for review to the NLRB’s Division of Advice all cases involving “significant legal issues.” The memo specifically included cases that involve the argument that the misclassification of employees as independent contractors is a violation of the NLRA.

Furthermore, on January 25, 2019, the Board clarified application of the test it uses to evaluate independent contractor status in SuperShuttle DFW, Inc. In the case the Board found “that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain.” The decision overruled the Board’s prior 2014 decision in FedEx Home Delivery,  which “modified the applicable test for determining independent-contractor status by severely limiting the significance of a worker’s entrepreneurial opportunity for economic gain.”

While we are encouraged by General Counsel Robb’s actions and the SuperShuttle DFW, Inc. decision, CDW continues to litigate this issue. One case concerning misclassification of independent contractors is currently pending before the Board. Velox Express deals with an employee who claims she was wrongfully discharged when she protested against her classification as an independent contractor. The presiding Administrative Law Judge ruled, without any substantive analysis, that she was in fact an employee and adopted the policy established by the Griffin memo. The case was appealed to the NLRB, providing President Trump’s Board with its first opportunity to rule on the General Counsel’s theory. CDW filed a brief in the case on April 20, 2018.

In Chamber of Commerce v. Seattle, the Chamber of Commerce filed suit against the city of Seattle over an ordinance that would allow for-hire drivers classified as independent contractors – like those driving for ridesharing companies – to unionize and collectively bargain. The Chamber challenged the ordinance on the grounds that it is preempted by federal labor law, explaining that Congress did not give independent contractors the right to organize or collectively bargain under the NLRA, and that permitting drivers to collectively bargain over pay would in effect allow them to collude on prices, violating antitrust law. On May 11, 2018, a three-judge panel of the Ninth Circuit Court of Appeals, in a unanimous opinion, sided with the Chamber and ruled that Seattle’s ordinance is unlawful as it violates antitrust laws. The court also ruled, however, that Seattle’s ordinance was not preempted by the NLRA. The Ninth Circuit on September 14 rejected Seattle’s request for review by the full appellate court, so the case will now proceed before the US District Court for the Western District of Washington.

CDW filed briefs in these cases; both of which can be found on our Resources page. CDW will continue to fight against unwarranted attacks on independent contractors and the employers who rely on them.

 

Independent Contractors Fact Sheet

Please see our resources page for more information on this issue.