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NLRB Reinstates Employer-Friendly Independent Contractor Standard

Independent Contractor

On January 25, 2019, the National Labor Relations Board (“Board”), reinstated a long-standing independent contractor standard.  This standard strengthens an employer’s ability to classify franchisees as independent contractors, or as employees exempt from the National Labor Relations Act.  In SuperShuttle DFW, Inc., the Board overruled FedEx Home Delivery, which severely limited the significance of an employee’s entrepreneurial opportunity for economic gain.

The Board concluded that entrepreneurial opportunity is the principal consideration when reviewing the overall effect of the common law factors.  In other words, the more the factors establish a presence of entrepreneurial opportunity, the more likely the employee will be classified as an independent contractor.

Here, the franchisees leased and/or owned their work vehicles, they controlled their method of compensation,  they had complete control over work schedules and conditions, and SuperShuttle generally did not supervise them.  All of these factors amounted to a significant entrepreneurial opportunity for economic gain and, thus, the Board classified the franchisees as independent contractors.

By reinstating its previous standard, the Board eased the process for classifying employees, especially franchisees, as independent contractors.  All employers should be mindful that certain employees who previously did not meet the independent contractor standard under FedEx Home Delivery, may now meet the reinstated standard.

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