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eLABORate: NLRB Reverts Back to Company Friendly Independent Contractor Test

January 28, 2019

In a decision that has significant implications on the status of ride share drivers for companies such as Lyft and Uber, the National Labor Relations Board (NLRB) on Friday, January 25, 2019, issued a ruling that held that SuperShuttle franchisee van drivers are independent contractors. The NLRB’s decision changes its prior independent contractor test and is a big win for companies that contract labor.

SuperShuttle drivers in the Dallas-Fort Worth area sought to organize but, to do so, they must be “employees” under Section 2(3) of the National Labor Relations Act. The drivers signed franchise agreements that characterized them as non-employee, franchisees who operate independent businesses. These drivers:

  • Supplied their own shuttle vans
  • Paid various fees to SuperShuttle
  • Set their own schedule, assignment and work hours
  • Are entitled to the money they earn for completing assignments
  • May hire and employee relief drivers to operate their vans

The NLRB determined that the franchisee drivers are independent contractors and not employees under Section 2(3). In reaching its decision, the NLRB applied the entrepreneurial opportunity principle to the common law independent contractor analysis. The NLRB focused on the various ways in which franchisees had opportunities for economic loss or gain including that franchisees owned their vehicles but were also responsible for vehicle maintenance and other fees, franchisees do not share fares with SuperShuttle, and franchisees operate their vehicles with little control by SuperShuttle.

The decision explicitly overrules FedEx Home Delivery, a 2014 NLRB decision that modified the applicable test for determining independent-contractor status by limiting the significance of a worker’s entrepreneurial opportunity for economic gain and emphasized right to control factors.

The NLRB attempted to temper its decision by explicitly stating that entrepreneurial opportunity for economic gain consideration is not a “super factor,” “shorthand formula,” or “trump card” in the independent-contractor analysis. Instead, the NLRB regarded it as a principle underlying the application of the common-law factors. Additionally, the NLRB emphasized that the principle should not be applied mechanically and may not apply to all cases.

The decision will surely impact disputes on the horizon concerning the status of ride-share drivers and similar workers.

Click here to read the full opinion.