On January 25, 2019, the National Labor Relations Board (NLRB or Board) returned to its long-standing independent contractor standard, reaffirming the Board’s adherence to the traditional common-law test. SuperShuttle DFW, Inc., Case 16-RC-010963 (Jan. 25, 2019).
The case involved shuttle-van-driver franchisees of SuperShuttle at Dallas-Fort Worth Airport. The Board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain.
These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s finding that the franchisees are not employees under the National Labor Relations Act (NLRA or Act).
The traditional test involves application of the nonexhaustive common-law factors enumerated in the Restatement (Second) of Agency §220 (1958):
- The extent of control which, by the agreement, the master may exercise over the details of the work.
- Whether or not the one employed is engaged in a distinct occupation or business.
- 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.
- The skill required in the particular occupation.
- Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
- The length of time for which the person is employed.
- The method of payment, whether by the time or by the job.
- Whether or not the work is part of the regular business of the employer.
- Whether or not the parties believe they are creating the relation of master and servant.
- Whether the principal is or is not in business.
The SuperShuttle decision overrules FedEx Home Delivery, a 2014 NLRB decision that modified the applicable test for determining independent-contractor status by severely limiting the significance of a worker’s entrepreneurial opportunity for economic gain. According to the Board:
“Properly understood, entrepreneurial opportunity is not an independent common-law factor, let alone a “super-factor” as our dissenting colleague claims we and the D.C. Circuit treat it. Nor is it an “overriding consideration,” a “shorthand formula,” or a “trump card” in the independent-contractor analysis. Rather, as the discussion below reveals, entrepreneurial opportunity, like employer control, is a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain. Indeed, employer control and entrepreneurial opportunity are opposite sides of the same coin: in general, the more control, the less scope for entrepreneurial initiative, and vice versa. Moreover, we do not hold that the Board must mechanically apply the entrepreneurial opportunity principle to each common-law factor in every case. Instead, consistent with Board precedent as discussed below, the Board may evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate.”
Chairman John F. Ring was joined by Members Marvin E. Kaplan and William J. Emanuel in the majority opinion. Member Lauren McFerran dissented.
In clarifying the role that entrepreneurial opportunity plays in its determination of independent-contractor status, the Board offers hope to companies who contract with individuals and entities for specialized services, and the individuals and entities who want to go into business for themselves, that they will not unwittingly form an employment relationship that is regulated, and in many cases burdened by, the NLRA and other labor and employment laws.