The National Labor Relations Board’s (NLRB’s) recent decision in The Atlanta Opera, Inc., 372 NLRB No. 95 (2023) will make it more difficult for employers to classify workers as independent contractors under the National Labor Relations Act (NLRA). The decision overturned the Trump-era Board’s SuperShuttle DFW, Inc. decision, which implemented a more pro-employer standard when considering whether a worker is an independent contractor or employee.
As a general matter of law, independent contractors are excluded from the protections granted to workers under the NLRA. In long-standing Supreme Court precedent, a multifactor test is used to decide a worker’s status. The test considers the following 10 factors:
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whether the work involves a certain occupation or business
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kind of occupation involved
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amount of skill required
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who supplies the tools and the workplace
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length of employment
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method of payment
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whether the work is part of the employer’s regular business
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whether the parties believe there is an employment relationship
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whether the principal is in business
When the test is applied, all factors are assessed, and no single factor is given greater weight.
When applying the test, the NLRB will consider the independent business analysis applied by previous Boards. This analysis includes a review of whether the worker “has a realistic ability to work for other companies,” whether the worker has an ownership interest in the services offered, and how much control the worker has over “important business decisions” like scheduling, purchasing equipment, and commitment of capital.
In the Atlanta Opera, Inc. case, the employer argued that the workers’ “significant entrepreneurial opportunity for gain or loss” was strong enough to prove that the workers are independent contractors. Though the Board does consider the workers’ entrepreneurial opportunity in the job, that factor standing alone cannot establish independent contractor status. The Board applied the Supreme Court’s multifactor test and determined that the makeup artists, wig artists, and hairstylists who work at the Atlanta Opera are employees and not independent contractors. The decision reverses the Trump Board’s application of the test, which heavily emphasized a worker’s entrepreneurial opportunity over other factors in determining who is an independent contractor.
While not unexpected, the Board’s decision is another win for workers’ rights. The independent contractor standard will likely tilt the scales more easily in an employee’s favor when assessing whether they are an independent contractor or employee and falling within the protection of the NLRA. The decision comes at a time when the Board is moving toward a significantly more employee-friendly environment. Employers utilizing independent contractors or considering doing so can reach out to Employers Council at info@employerscouncil.org to assess whether these workers are actually independent contractors.
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