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Biden Board vs. Trump Board: Here We Go Again! (Third Installment)

March 17, 2021

Last week, we provided you with the second of our six analyses of 14 decisions of the Trump Board that the soon-to-be Biden Board majority likely will seek to overrule in a rush to return to the more pro-union stance of the former Obama Board. 

This Third installment of our Client Alerts addresses Joint Employer Rulemaking; and Independent Contractor and Employee Status. 

The Fourth Alert, which you can expect next week, will address “Contract Coverage” vs. “Clear and Unmistakable Waiver”; Contractual Past Practices Survive CBA Expiration; and Intermittent Strikes as Unprotected Activity.  The Fifth installment addresses Post-Certification Bargaining of Discharges and Suspensions; and Employment Arbitration May Lawfully Preclude Collective Claims.  The Sixth Alert addresses Micro-Units and Unit Scope; and Withdrawal of Recognition and Re-establishment of Union Majority.   

A. JOINT EMPLOYER RULEMAKING.

On February 25, 2020, the Trump NLRB issued a final rule, effective April 27, 2020, governing joint-employer status.  NLRB Rules and Regulations, Sec. 103.40, 29 C.F.R. § 103.40.  The rule provides that, for two separate entities to be a joint-employer, each entity must exercise actual control over at least one essential term of employment of the other employer’s employees.  Id. at §103.40(a).  Essential terms of employment are: wages; benefits; hours of work; hiring; discharge; discipline; supervision; and direction.  Id. at §103.40(b).

The Trump Board’s joint-employer rule overturned the standard for determining joint-employer status that the Obama Board announced in Browning-Ferris Industries of California, Inc., where the Obama Board held that an entity’s possession of the right to control another entity’s employees could be sufficient for joint-employer status.  362 NLRB 1599, 1600 (2015).  In sum, if a company retained, but had not yet exercised its contractual right todetermine the wages, benefits, or working conditions of another company’s employees, that was sufficient for a finding of joint-employer status.  Id.

This is an extremely important issue for labor unions targeting franchises and the gig economy for increased union organizing.  Accordingly, a return to the Browning-Ferris standard likely will be a primary objective of the eventual Biden Board majority; however, it will have to do so through the more time-consuming method of public-notice and comment rule-making under the federal Administrative Procedure Act, as did the Trump Board.  The prompter avenue of case-law decision making will not be available to the Biden Board majority unless and until Section 103.40 of the Board’s Rules and Regulations is removed or amended.

B. INDEPENDENT CONTRACTOR AND EMPLOYEE STATUS.

In SuperShuttle DFW, Inc., the Trump NLRB returned to the “traditional test” for determining whether a worker is an employee or independent contractor.  367 NLRB No. 75, slip op. at 3 (Jan. 25, 2019).  This decision applies a non-exhaustive list of factors in determining a worker’s independent contractor or employee status.  A particularly important principle articulated by the Trump Board is whether the worker possesses a significant “entrepreneurial opportunity” for gain or loss, which supports a finding of independent contractor status.  Id. at 4–5, 7. 

The acknowledged major factor attendant to a conclusion of employee status vel non is the degree or extent of the right of control that the alleged employer may exercise over the details of the work to be performed.  Id. at 7.  An employer retains and exercises supervision of the manner and means of the employee’s performance of work, whereas an independent contractor is responsible for completing the work to the satisfaction of the parties’ mutual specifications.

The SuperShuttle decision modified the application of the traditional test of employee or independent contractor as formulated by the Obama Board in FedEx Home Delivery, 361 NLRB 610, 610 (2014), enforcement denied, 849 F.3d 1123 (D.C. Cir. 2017).  The Obama Board maintained that the entrepreneurial opportunity consideration was significant only insofar as the worker possessed an independent business, which is its own independent factor within the traditional test.  Id.

If the Biden Board returns to FedEx Home Delivery’s formulation of the traditional test, it would be more difficult for workers to be classified as independent contractors because entrepreneurial opportunity would cease to be a primary focus of the analysis.

In addition, the Trump Board held in a separate decision that an employer’s purposeful misclassification of a worker as an independent contractor rather than as an employee is not per se an unfair labor practice within the meaning of Section 8(a)(1) of the National Labor Relations Act.  Velox Express, 368 NLRB No. 61, slip op. at 25 (Aug. 29, 2019).  It is probable that the Biden Board will overrule Velox Express and hold that purposeful misclassification of employees as independent contractors violates Section 8(a)(1) even though no prior Board decisions have so ruled.

NOTICE:  Material provided on this website has been prepared by Kauff McGuire & Margolis LLP solely for general informational purposes, and it is not intended to and does not constitute legal advice.  Material provided on the website is not privileged and does not create an attorney-client relationship with the Firm or any of its lawyers.