The National Labor Relations Board (NLRB) issued a decision on June 13, 2023, in the case of The Atlanta Opera, Inc. The decision overruled the Trump-era standard for determining independent contractor status under the National Labor Relations Act (NLRA) and reverted back to the Obama-era standard.
The Board expressly rejected the holding of the SuperShuttle Board that entrepreneurial opportunity for gain or loss should be the “animating principle” of the independent-contractor test. The NLRB’s decision in Atlanta Opera makes it more difficult for companies to hire independent contractors. The decision reinstates the multifactor common-law factors for determining independent contractor status, which focuses on the degree of control (or the right to control) that the employer exercises over the worker. The factors include, but are not limited to:
- The skill required to perform the job.
- Is there an actual skill or trade involved?
- The extent to which the worker is involved in the business’s operations.
- Can the business operate without the services of the worker and others like him/her?
- The amount of financial risk that the worker bears
- Is there an actual investment, not just use of commonly owned equipment and tools?
- The worker’s opportunity for profit or loss.
- “Actual” financial risk, not just loss of commonly owned equipment or tools.
- The worker’s freedom to set his or her own hours and work location.
- The worker dictates the times (within reason) and work location (this is subjective to the work performed).
- The worker’s relationship with other workers.
- Is the worker independent from the work of others? Can he/she operate without depending on other independent workers or your staff?
This decision in not surprising as the common law test and/or the ABC test are the most common requirements amongst states. There is, of course, also the IRS 20 factor “right to Control” test that is used (or at least considered as part of an examination)
This decision is likely to lead to more workers being able to unionize and bargain collectively for better wages and working conditions. However, it is likely to be challenged in court before it becomes a standard bearer in NLRB decision making.
The biggest question is: Does your business model meet the criteria of the government and the states that your company operates in?
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