June 2023

Yesterday, June 13, 2023, the NLRB issued a lengthy decision in its Atlanta Opera case dealing ‎with the applicable test for independent contractor status under the National Labor Relations Act ‎‎(NLRA). This decision reversed the Board’s prior test for IC status as expressed in the ‎SuperShuttle case decided by the NLRB in 2019. In a lengthy decision, three of the four ‎members of the Board expressly declined to follow a 2017 decision by the U.S. Court of Appeals ‎for the District of Columbia Circuit in a case referred to as FedEx II, where the circuit court ‎concluded that the NLRB was seeking to “nullify this court’s [prior FedEx] decision” as to the ‎applicable test for independent contractor status. The bulk of the Board’s majority 19,000-word ‎decision focused on the supposed fallacies in the NLRB’s SuperShuttle decision and the ‎correctness of the NLRB’s prior FedEx decisions, which has twice been rejected by the D.C. ‎Circuit. But when the NLRB majority’s new decision is analyzed, does it really make a ‎difference what test the NLRB uses to determine IC status? As vividly demonstrated by the ‎Atlanta Opera case, nearly all of these independent contractor cases will be decided the same ‎way, regardless of which test is used. ‎…

The lead case in our review of last month’s legal developments in the area of independent contractor compliance and misclassification is a decision by the U.S. Court of Appeals for the First Circuit, in which it addresses the interstate transportation worker exemption to arbitration under the Federal Arbitration Act (FAA). That decision, at odds with a recent decision issued by another federal appellate court, treated the frequency of driving as the principal criterion in determining whether an independent distributor of food products engages in interstate transportation. As noted below, the First Circuit, applying the Supreme Court’s 2022 decision in Southwest Airlines v. Saxon, found that the distributors are exempt from arbitration because they “frequently perform transportation work [even if] they also have other responsibilities.” Decisions like the First Circuit’s have created confusion among businesses, independent contractors, employees, and their lawyers over the scope of the FAA’s interstate transportation exemption and the implications of Saxon. Many ICs and other workers that drive long distances every day have little or no relationship to the transportation industry. For example, many independent surveyors and insurance adjusters work at multiple locations in a multi-state area each day, some at significant distance from one location to the next. Are they interstate transportation workers simply because they drive frequently in different states? Likewise, incidental driving done by route sales employees who qualify as outside salespersons under the Fair Labor Standards Act, like driving by the independent distributors in the First Circuit case, is treated by the Labor Department and courts as work that is “incidental to … the employee’s own outside sales or solicitations.” 29 C.F.R. 541.504(a). One takeaway from the First Circuit decision is to make sure that agreements with independent contractors and other workers not engaged in the transportation industry describe their services in a manner that supports arbitration under the FAA. This is part of the IC Diagnostics (TM) process that has been the subject of other posts on this subject on this blog.…