NLRB Issues Decision Clarifying Employee-Employer Test

In June 2023, the National Labor Relations Board (the “Board”) issued a decision clarifying the test used to determine whether a worker is an employee under the National Labor Relations Act (“NLRA”) or an independent contractor.  The decision is significant because the NLRA provides employees (not independent contractors) with important protections, including forbidding employers from interfering with, restraining, or coercing employees in the exercise of rights relating to organizing, forming, joining or assisting a labor organization for collective bargaining purposes, or from working together to improve terms and conditions of employment.  

To determine whether a worker is an employee under the NLRA and entitled to protections, the Board has historically considered a list of non-exclusive common law factors with no one factor being determinative or superior.  Those factors include: (i) the extent of control which the potential employer may exercise over the details of the work; (ii) whether or not the one employed is engaged in a distinct occupation or business; (iii) the kind of job at issue and whether the work for that job is usually done under the direction of the employer or by a specialist without supervision; (iv) the skill required for the particular job; (v) whether the potential employer or worker supply the instrumentalities, tools, and a place to perform the work; (vi) the length of time for which the person is employed; (vii) the method of payment, whether by the time or by the job; (viii) whether or not the work is part of the regular business of the employer; (ix) whether the parties believe they are creating the relation of master and servant; and (x) whether the principal is in business.  In addition to these factors, the Board has also considered whether a worker has a significant entrepreneurial opportunity for gain or loss.  In particular, the Board has considered whether workers can work for other companies, can hire their own employees, and has a proprietary interest in their work. 

In 2019, the Board issued a decision in matter SuperShuttle DFW, Inc. (“SuperShuttle”) finding that the consideration of entrepreneurial opportunity was an “animating principle” of the employee/independent-contractor test, placing more importance on that factor than any others.  However, the Board overruled the SuperShuttle decision in the June 2023 decision in the The Atlanta Opera Inc. & Make-Up Artists & Hair Stylists Union, Loc. 798, Iatse (“Atlanta Opera”) action.  Specifically, the Atlanta Opera decision reaffirmed that entrepreneurial opportunity is simply one factor to consider in the employee/independent contractor analysis and that no one factor is decisive.  The decision also provides helpful guidance for how the entrepreneurial opportunity should be analyzed. 

The Atlanta Opera decision is an important win for employees as many employees across the country are engaging in efforts to unionize or to demand better pay and work benefits.  Indeed, the holding in Atlanta Opera makes it less likely that employers will be able to use alleged entrepreneurial opportunity to justify designating workers as independent contractor and thereby denying them their rights under the NLRA.