On June 13, 2023, the National Labor Relations Board (“NLRB”) announced its highly anticipated decision in The Atlanta Opera, Inc., which addresses the classification of workers as employees or independent contractors for purposes of the National Labor Relations Act (“NLRA”). The decision restores the multifactor common-law framework the NLRB had articulated in 2014 for worker classification. In so doing, the Board rejected the more employer-friendly guidance it articulated in 2019, that a worker’s entrepreneurial opportunity for gain or loss should be the “core” of the independent contractor test. The test for classifying workers is significant because independent contractors are excluded from the NLRA’s statutory protections for labor organizing activities.
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Under the framework set forth in Atlanta Opera, to determine whether a worker is properly classified as an employee or independent contractor, all of the traditional common-law worker classification factors “must be assessed and weighed with no one factor being decisive.” Those factors include, but are not limited to, the factors articulated in the Restatement (Second) of Agency:
- 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.
In addition to the consideration of the above common-law factors, which are non-exhaustive, the NLRB will also “consider evidence of entrepreneurial opportunity when assessing whether a putative contractor is, in fact, rendering services as part of an independent business.” The Board will “consider not only whether the putative contractor has a significant entrepreneurial opportunity, but also whether the putative contractor: (a) has a realistic ability to work for other companies; (b) has proprietary or ownership interest in their work; and (c) has control over important business decisions, such as the scheduling of performance; the hiring, selection, and assignment of employees; the purchase and use of equipment; and the commitment of capital.” In considering these factors, the NLRB will analyze whether the employer “has effectively imposed constraints on an individual’s ability to render services as part of an independent business.” Evidence that an employer has imposed such constraints on a worker “include[s] limitations placed by the employer on the individual’s realistic ability to work for other companies, and restrictions on the individual’s control over important business decisions.” The NLRB indicated that it will distinguish between “actual opportunities, which allow for the exercise of genuine entrepreneurial autonomy, and those that are circumscribed or effectively blocked by the employer.” “[T]he weight given to whether a putative contractor renders services as part of an independent business will depend upon the factual circumstances of the particular case.”
The Atlanta Opera decision represents the latest salvo in a string of recent decisions by the NLRB addressing the proper framework for making worker classification decisions. In 2014, the NLRB, in its FedEx Home Delivery decision, articulated a framework that required “all of the incidents of the relationship [to] be assessed and weighed,” including the entrepreneurial opportunity factor, “with no one factor being decisive.” In 2019, the NLRB took a different approach in its SuperShuttle DFW, Inc. decision, which overruled FedEx Home Delivery and held that entrepreneurial opportunity should be “a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.”
The Board’s decision in Atlanta Opera expressly overrules the SuperShuttle decision, and reinstates the worker classification framework articulated in the 2014 FedEx Home Delivery decision. The NLRB explained that it believes FedEx Home Delivery and Atlanta Opera are more consistent with the Supreme Court’s 1968 decision in NLRB v. United Insurance Co. of America, which held that the NLRA incorporated the “common-law agency test…in distinguishing an employee from an independent contractor.” The Atlanta Opera decision was joined by three of the current Board members, with one member dissenting in part and concurring in part. The dissent viewed SuperShuttle’s focus on entrepreneurial opportunity as “the most effective measure for determining the important issue of whether individuals should be considered employees.”