The Sophisticated Employer Blog

The National Labor Relations Board issued a decision on June 13 that makes it more difficult for employers to demonstrate that their workers are independent contractors.

By doing so, the board overruled its 2019 SuperShuttle decision which had affirmed the importance of “entrepreneurial opportunity” in determining whether employees should be considered independent contractors. The SuperShuttle decision said that the most important factors to consider in determining a worker’s status are whether a worker operates an independent business and whether there is an opportunity for profit or loss. Workers with an independent contractor status are not considered employees and are thus unable to unionize.

The NLRB stated in its decision that the SuperShuttle decision ran counter to U.S. Supreme Court precedent which involves analyzing common law factors. In overturning the 2019 decision, the NLRB has restored its previous standard set forth in the 2014 FedEx Home Delivery case, which had “entrepreneurial opportunity” as only one factor among several to be considered in determining independent contractor status.

The FedEx standard, according to the board’s majority, is a way to look at the “full constellation of considerations that the board has addressed under the rubric of entrepreneurialism.” Put more simply, the FedEx standard looks at the common law factors which are aligned with Supreme Court precedent and still allows for workers’ entrepreneurship to be an assessment factor.

This decision will have a great impact on both workers and employers. Business groups have previously found the FedEx standard to be both confusing and unpredictable, which without further guidance from the NLRB will again become the reality for employers. Alternatively, workers will now have an easier time organizing, which when combined with the recent decision by the legislature to repeal Michigan’s Right-to-Work means that workers and union rights are stronger now than at any point in the past decade.

Employers should make certain to consult legal counsel in order to understand their changing responsibilities under the increasingly pro-union climate in Michigan.