As Jackson Browne sang in “The Load Out”:
Now the seats are all empty
Let the roadies take the stage
Pack it up and tear it down
They're the first to come and last to leave
Working for that minimum wage
They'll set it up in another town
Recently, the Eleventh Circuit, which covers Alabama (as well as Florida and Georgia), overturned a NLRB decision that held stagehands were employees, and not independent contractors. In overruling the NLRB, the Eleventh Circuit, in Crew One Productions, Inc., v National Labor Relations Board, set forth the factors in the Restatement (Second) of Agency § 220(2) to support the conclusion that the workers were independent contractors:
- 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 a part of the regular business of the employer;
- whether or not the parties believe they are creating the relation of master and servant; and
- whether the principal is or is not in business.
The Court gave special attention to the issue of control, or lack thereof, in overruling the NLRB. The Court found that:
- Crew One did not control the stagehands. The only “control” that Crew One exercised was the time for the stagehands to be on the job. Once on the job, the clients controlled the work performed by the stagehands. “Crew One lacks the expertise to direct the stagehands in their work for any particular client.”
- Crew One did not withhold taxes. The Court held that the fact that Crew One did not deduct Social Security or income taxes from the wages “ . . . is a strong indication of the absence of employee status.”
- Crew One required each worker to sign an “Independent Contractor Agreement.” The intent of the parties must be examined, and the agreement clearly demonstrated that the intent was to create an independent contractor relationship, not an employer/employee relationship.
- Negotiations over pay is not a factor that should be considered in determining whether a worker is an employee or an independent contractor.
- Although Crew One provided workers' compensation coverage for the stagehands, this coverage was provided based on the request of the clients and the clients reimbursed Crew One the premiums.
The Court found that: “When we consider all of the factors, we must conclude that the stagehands are independent contractors. The most important factor, control, supports only this conclusion. The failure to withhold taxes, the independent contractor agreements, the nature of Crew One's business, the absence of benefits, the tools, and the insurance provided by the clients also support only this conclusion. The only factor that weighs in favor of the opposite result is the hourly payments, but this factor is outweighed by the totality of the other factors, especially the lack of control. Based on the factual findings of the Board, the stagehands are independent contractors and the decision of the Board was contrary to law.”
Practice pointer. The NLRB, as well as other federal agencies, such as DOL, EEOC and the IRS, have been and will continue to aggressively pursue their agendas, including trying to classify workers as employees, not independent contractors, whenever possible. As the courts continue to provide guidance, the Eleventh Circuit once again ruled against the NLRB and found that independent contractors can and do exist in today's workforce. Those of you who use independent contractors should examine the criteria set forth in the Crew One case and consult with your legal advisor to determine if your workers are independent contractors or employees. A legal battle, even if successful, will result in large legal fees and expenses, as well as time away from conducting your business. A loss will increase the financial burden, including benefits, overtime and additional tax liabilities.