The sky is not falling.
When the National Labor Relations Board (NLRB or Board) issued its Atlanta Opera decision on June 14, I read the decision. Then I read some of the commentary issued quickly by news outlets right after the decision dropped. I’m not sure whether all of those commentators read the actual decision. To those who think this decision will have any significant impact on independent contractor classification under the National Labor Relations Act (NLRA or Act), I disagree.
In Atlanta Opera, the Board purported to revise the test for determining employee status under the Act. The Board said it was overruling the 2019 SuperShuttle DFW case and readopting the FedEx II standard from 2014. But is there really any practical difference? I think not.
This week’s decision confirms what the Supreme Court told us in 1968 – that the test for determining who is an employee under the NLRA is a common law agency test. A fact finder should weigh the 10 factors listed in Section 220(2) of the Restatement (Second) of Agency, which everyone agrees are as follows:
1. The extent of control which, by the agreement, the master may exercise over the details of the work.
2. Whether or not the one employed is engaged in a distinct occupation or business.
3. 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.
4. The skill required in the particular occupation.
5. Whether the employer or the workman supplies the instrumentalities, tools and the place of work for the person doing the work.
6. The length of time for which the person is employed.
7. The method of payment, whether by the time or by the job .
8. Whether or not the work is a part of the regular business of the employer.
9. Whether or not the parties believe they are creating a relation of master and servant.
10. Whether the principal is or is not in business.
Because this is a balancing test, different fact finders may weigh the factors differently. That’s true in every misclassification dispute. That’s why we see misclassification cases sometimes reversed on appeal. One judge views the facts one way, and another judge views the facts a different way, even when both judges apply the same test.
The difference between Atlanta Opera/FedEx II and SuperShuttle DFW is more a matter of the individual fact finders’ perspectives and individual propensity toward finding (or not finding) misclassification.
In SuperShuttle DFW, the Republican-led Board concluded that the common law agency test applies, and the Board should consider an individual’s opportunities for entrepreneurship as part of its approach to assessing whether workers are employees or independent contractors. In SuperShuttle DFW, the Board determined that entrepreneurial opportunity should be the “animating principle” through which the common law test factors should be viewed.
In Atlanta Opera, the Democrat-led Board concluded that the common law agency test applies and the Board should consider whether the worker “is, in fact, rendering services as part of an independent business.” In considering that issue – which is already incorporated into the common law test – the Board “should give weight only to actual (not merely theoretical) entrepreneurial opportunity, and that it should necessarily evaluate the constraints imposed by a company on the individual’s ability to pursue this opportunity.”
The Atlanta Opera decision then explained how the Board should evaluate whether such constraints on entrepreneurship exist. The Board wrote that it would consider whether the putative contractor:
- Has a realistic ability to work for other companies.
- Has proprietary or ownership interest in their work.
- Has control over important business decisions, such as the scheduling of performance; the hiring, selection and assignment of employees; the purchase and use of equipment; and the commitment of capital.
So there’s the difference. Do you see it? It’s subtle, and I’m not sure it makes any real difference in the end. Under Atlanta Opera, the Board would look at whether the relationship in fact constrains an individual’s actual entrepreneurial opportunities, while under SuperShuttle DFW, the right to pursue entrepreneurial opportunities would be more the focus.
But is there even a difference there? In Republican-appointed Member Kaplan’s dissent, he concedes that the Board should only give weight to actual, not theoretical, entrepreneurial opportunities. The crux of his disagreement, when you get right down to it, is his interpretation of the importance of certain facts when applying the common law test.
In the end, the common law test still applies.
The Atlanta Opera decision provides a road map of sorts for lawyers arguing worker classification cases. Those lawyers should emphasize the facts that show actual entrepreneurship, not just the right to pursue such opportunities.
In many cases – including in Atlanta Opera – that’s a distinction without a difference. In this case, the Democratic majority and the dissent by Member Kaplan agreed that the makeup artists, wig artists and hairstylists were employees, not independent contractors, even after spilling considerable ink over the nuanced differences in how they would approach the common law test.
Before issuing the Atlanta Opera decision, the Board asked for public comment on whether it should overrule SuperShuttle DFW and, if so, whether it should readopt FedEx II or a new test entirely. One option the Board could not entertain was the adoption of an ABC test, and that’s because the Supreme Court has ruled that the applicable test under the NLRA is the common law test.
The Board’s opinions in Atlanta Opera, FedEx II and SuperShuttle DFW perhaps supply nuance around how the Board will interpret the common law test. But the Board does not have the legal authority to deviate from the common law test. It would take legislative action to abandon the common law test in favor of an ABC test or some other set of factors. To get around the Supreme Court’s 1968 ruling that the common law test applies to the NLRB, the Act itself would have to be changed.
Nothing like that has happened here. The common law test applied before, and the common law test applies now.