A Regional Director of the National Labor Relations Board has ruled that a group of musicians were statutory employees under the National Labor Relations Act and, therefore, entitled to vote in an NLRB-conducted union representation election. In the Matter of Fiddlehead Theatre Company, Inc. and Boston Musicians Association et al., Case Number 01-RC-179597 (July 26, 2016). The decision comes on the heels of a holding by the U.S. Court of Appeals for the District of Columbia Circuit granting enforcement of an NLRB Order that musicians with the Lancaster Symphony Orchestra were employees, not independent contractors, and entitled to join the union. Lancaster Symphony Orchestra v. NLRB, No. 14-1247 (D.C. Cir. 2016).
Whether individuals performing services for an entity are employees, who are protected by the NLRA, or independent contractors, who are not, is determined by 11 well-established factors in the Restatement (Second) of Agency § 220 (1958), the NLRB held in 2014 and 2015. FedEx Home Delivery, 361 NLRB No. 55 (2014) and Sisters’ Camelot, 363 NLRB No. 13 (Sept. 25, 2015).
The factors are:
- Extent of control by the employer
- Whether or not the individual is engaged in a distinct occupation or business
- Whether the work is usually done under the direction of the employer or by a specialist without supervision
- Skill required in the occupation
- Who provides the supplies, tools, and place of work
- Length of time for which individual is employed
- Method of payment
- Whether or not the work is part of the regular business of the employer
- Whether or not the parties believe they are creating an independent contractor relationship
- Whether the principal is or is not in the business
- Whether the evidence tends to show that the individual is, in fact, rendering services as an independent business
In Lancaster, the NLRB and the Circuit Court relied heavily on the orchestra’s control over the manner of the musicians’ performance, including limiting their conversations during rehearsals and performances. In Fiddlehead, the Regional Director ruled the musicians were employees despite the employer’s having established the existence of several factors tending to show the musicians were independent contractors: (1) they worked on a show-by-show basis, (2) they were highly skilled workers, (3) they supplied their own instruments, and (4) they were paid a flat fee. However, the Regional Director relied on several other factors in finding employee status, including that (1) the employer exercised substantial control over the details of the musicians’ work, (2) the musicians had very limited input into scheduling of performances, (3) the musicians were instructed to follow the company’s dress code, and (4) the musicians did not have the potential for entrepreneurial gain. Regional Director’s decision is appealable to the NLRB in Washington, D. C.
In a related development, the Board’s General Counsel has announced that he will seek to convince the five-member NLRB that misclassification of individuals as independent contractors instead of employees independently violates the NLRA because it restricts those misclassified employees from exercising their Section 7 (of the NLRA) rights to engage in protected concerted activity. Employers that utilize individuals whom they believe are independent contractors rather than employees should scrutinize carefully the relationship with a keen understanding of the factors deemed relevant by the NLRB. As is the case under many other federal and state laws, proving independent contractor status is likely to be an uphill battle.