A Regional Director for the NLRB issued an unfair labor practice complaint on April 18, 2016 alleging that a transportation company “has misclassified its employee-drivers as independent contractors, thereby inhibiting them from engaging in Section 7 activity and depriving them of the protections of the [National Labor Relations] Act.” While Regional Directors are merely prosecutors in the unfair labor practice context, they serve as a form of gatekeeper because no unfair labor practice charge can reach the NLRB in Washington, D.C. unless a Regional Director first issues a complaint. Therefore, this allegation – that mere misclassification is an unfair labor practice – has the potential to be a far-reaching development in the area of independent contractor law. What the NLRB eventually does in this case, however, would have little or no impact on businesses that structure, document, and implement their independent contractor relationships in a manner that complies with applicable laws, as more fully noted in the “Takeaway” below.

Background

The NLRB does not issue complaints on its own initiative. Rather, the law provides that any person may file an unfair labor practice charge with a Regional Director of the NLRB. If a Regional Director, who is a designee of the NLRB’s General Counsel, determines that there is reason to believe that there is merit to the charge, the Regional Director may issue a complaint.

In this case, the International Brotherhood of Teamsters filed a charge with the Regional Director for Region 21 of the NLRB in Los Angeles in August 2015 against Intermodal Bridge Transport. The Teamsters union has been trying to organize port drivers in California and at other ports around the nation, including groups of truckers whom the union claims have been misclassified as independent contractors. Eight months later, the Regional Director issued the unfair labor practice complaint.  Intermodal Bridge Transport, Case 21-CA-157647 (Apr. 18, 2016).

The language from the complaint quoted in the first paragraph of this blog post is enough to cause experienced labor law practitioners to express a quizzical look. However, the complaint needs to be viewed in context. It does not solely allege that misclassification is an unfair labor practice; rather, there are many other allegations in the complaint, including claims that a supervisor:

  • interrogated a driver about his support for the Union;
  • promised more work to a driver if he refrained from union organizational activities;
  • threatened a driver with job loss and unspecified reprisals by stating that there would be consequences and drivers would regret it if they continued supporting the Union; and
  • threatened a driver that Respondent would close the facility if the union won or came in to the facility.

In the very next paragraph of the complaint, the Regional Director alleged that Intermodal has misclassified its drivers as independent contractors and that, by so doing, it has inhibited them from engaging in activities to support a union, thereby depriving them of the protections of the law, in violation of the National Labor Relations Act.

Analysis

This newly-issued NLRB complaint by the Regional Director in Los Angeles is likely been issued with the approval of Richard Griffin, the General Counsel of the NLRB.  Only a month ago, on March 22, 2016, General Counsel Griffin issued a memorandum to all Regional Directors listing the types of cases that are required to be submitted to his Division of Advice where they “involve the General Counsel’s initiatives or policy concerns.”  One of the types of cases he listed are those “involving the employment status of workers in the on-demand economy.”  Thus, it appears likely that the issuance of the complaint was at the specific direction of the General Counsel.

The allegations in the complaint about interrogation, promises, and threats are, of course, classic types of unfair labor practice allegations.  In contrast, misclassification alone is typically regarded as nothing more than a legal status that a company places on a worker – no different than if an employer misclassifies a rank-and-file worker as a supervisor as that term is defined under NLRB law, or misclassifies a worker as exempt from overtime under the FLSA, or misclassifies an individual as ineligible for some ERISA benefit. Something more is typically required under these federal laws in order to violate those laws – such as denying the rank-and-file worker the right to discuss union organizing, or failing to pay overtime to a non-exempt employee who works over 40 hours in a work week, or refusing to pay benefits to an employee covered by the eligibility provisions of an employee benefit plan.

Because the Intermodal case included allegations of other “classic” violations of the law (threats, interrogations, and promises), it is too early to tell if the General Counsel of the NLRB is taking the position that mere misclassification of workers as independent contractors violates the National Labor Relations Act – or that something more must be done to a worker whom the General Counsel believes should be classified as an “employee” under NLRB and court decisions defining that term.

After Intermodal files an answer to the complaint, a hearing will be held before an administrative law judge, who will decide if Intermodal violated the law. The ALJ’s decision will be subject to appeal to the NLRB in Washington, and the NLRB’s decision is then subject to review by a federal court of appeals.

Statements and threats of the nature alleged in the complaint can sometimes be unfair labor practices even if they are made to non-employees.  But, if there are no employee-drivers – that is, if all of the drivers are valid independent contractors under the NLRA – then there might not be any violation of the law. Thus, the threshold question to be decided is whether the truckers are independent contractors under current NLRB decisions on the subject. Some of the NLRB’s decisions in this area of the law, however, have not been enforced by the courts.

Takeaway

Regardless of the eventual result in the Intermodal case, businesses that utilize independent contractors would be wise to focus on enhancing their compliance with applicable IC laws instead of concerning themselves about an agency that may be expanding its notion of what constitutes an unfair labor practice in the area of IC misclassification. The Regional Director’s allegations in the Intermodal complaint would have little or no impact on a company that properly classifies its workers under NLRB law.

Businesses interested in enhancing their compliance with IC laws can do so in a variety of ways, as detailed in our White Paper on minimizing IC misclassification risks, including the use of IC Diagnostics,™ which assesses IC compliance under applicable law, restructures and re-documents the IC relationship in a more compliant manner, and then implements the IC relationship in a customized and sustainable fashion.