Jun 06, 2017 - 4:45pm

Misclassified Logic at the NLRB


Executive Director, Labor Policy

During the Obama administration, as observers of labor policy know well, the National Labor Relations Board (NLRB) was run by a decidedly pro-union majority that created a lot of mischief and uncertainty.  The result has been a series of legal battles over the Board’s warped interpretations of the National Labor Relations Act (NLRA), which hopefully will come to an end when the Trump administration appoints two new members. 

As just one example of the extent to which the NLRB was disconnected from reality, the Board made the alleged misclassification of employees as independent contractors a major focus of its work.  The reason for this special attention is not hard to discern: the NLRA prevents unionization by independent contractors.  So, if your goal is to create more union members, a way must be found around this impediment.  Thus, the Board sought a new means of establishing an employee-employer relationship even where none existed. 

The NLRB even tried to circumvent the United States Court of Appeals for the District of Columbia, which issued a clearly-worded opinion on the issue of independent contractors back in 2009 in a case involving FedEx drivers. 

In that decision, FedEx I, the D.C. Circuit noted that the Supreme Court held in 1968 that “that the determination of whether a worker is a statutorily protected ‘employee’ or a statutorily exempt ‘independent contractor’ is governed by ‘common-law agency.’”  Given that, the court explained its methodology for determining employee status and observed that it was appropriate to place an emphasis on “whether the ‘putative independent contractors have significant entrepreneurial opportunity for gain or loss.’” In light of that analysis, it found that the drivers in question were not employees and ruled against the NLRB.

Fast forward eight years, and the D.C. Circuit was forced to issue a scathing decision against the NLRB for its apparent intransigence when the Board sought to bring another case against FedEx over exactly the same issue.  In the more recent decision, the court surmised that the NLRB wanted to lessen the importance of “entrepreneurial opportunity” and make it “part of a broader factor that asks whether…[a] putative independent contractor is, in fact, rendering services as part of an independent business.” 

However, the court rejected the Board’s attempt to use its own standard, saying, “it is as clear as clear can be that ‘the same issue presented in a later case in the same court should lead to the same result.’… Doubly so when the parties are the same. This case is the poster child for our law-of-the-circuit doctrine, which ensures stability, consistency, and evenhandedness in circuit law…. [T]he Board cannot effectively nullify this court’s decision in FedEx I by asking a second panel of this court to apply the same law to the same material facts but give a different answer.”

This blog has noted in the past that the NLRB has a tendency to thumb its nose at federal courts in its zealous pursuit of a pro-labor agenda, and the issue of worker misclassification is just one example of it. 

Appointees from the previous administration still hold a 2-1 majority on the NLRB.  Until new nominees take their place, employers will have to remain on guard against any further shenanigans from a biased Board.

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About the Author

About the Author

Sean P. Redmond
Executive Director, Labor Policy

Sean P. Redmond is Executive Director, Labor Policy at the U.S. Chamber of Commerce.