On January 25, 2019, in a long-anticipated decision, the NLRB overturned another Obama-Board decision, FedEx Home Delivery, 361 NLRB 610 (2014), which modified the test for whether an individual is an “employee” or an independent contractor under the NLRA (read about that decision here).  The Board, in a 3-1 decision (Chairman Ring and Members Kaplan and Emanuel joined the majority; Member McFerran dissented), rejected the standard established in 2014 that limited the import of an individual’s entrepreneurial opportunity for purposes of the independent contractor analysis, and returned to the traditional common-law agency test.

This holding represents another decision that reverts Board law to long-standing precedent that predated the Obama administration, and casts doubt on independent contractor decisions applying the FedEx test since 2014.

Just a few short days later, on January 28, NLRB Chairman John Ring stated in an interview that the Board could provide greater clarity as to the independent contractor analysis by providing specific examples through the rulemaking process, and could also use rulemaking to tackle other hot button areas of federal labor law.

SuperShuttle Holding

In SuperShuttle DFW Inc., 367 NLRB No. 75 (2019), the NLRB found that franchisees who operate shared-ride vans for SuperShuttle Dallas-Fort Worth are independent contractors, not “employees” covered under the NLRA.  The Board affirmed the Acting Regional Director’s August 16, 2010 decision, in which she found that the franchisees were independent contractors based upon a traditional common-law agency analysis.

The Board overturned its earlier decision in FedEx Home Delivery, holding that FedEx impermissibly altered the traditional common-law agency test and long-standing precedent by holding that entrepreneurial opportunity represented just “one aspect of a relevant factor that asks whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business” – as opposed to “an ‘animating principle’ of the inquiry.”  The Board reaffirmed the traditional common-law agency test that it had applied prior to FedEx.

Application of Common-Law Agency Independent-Contract Analysis in SuperShuttle

In applying the traditional common-law test, the Board noted that franchisees own (or lease) and thus control their vans; retain complete control over their daily work schedules and working conditions; and pay a monthly fee to the franchisor, while keeping all collected fares.  The Board held that these facts provided franchisees with significant entrepreneurial opportunity and control over how much money they made each month.

The Board also noted that, by sharp contrast, SuperShuttle has little control over the franchisees’ performance while driving and that SuperShuttle’s compensation is unrelated to the franchisees’ collected fares.  Finally, the Board found that the absence of supervision of franchisees and the understanding between the parties that franchisees are independent contractors (per the express language of the “Unit Franchise Agreements,” which provides in bold and capital letters that the franchisee is “NOT AN EMPLOYEE OF EITHER SUPERSHUTTLE OR THE CITY LICENSEE”) weighed significantly in favor of the franchisees’ status as independent contractors.

Impact of SuperShuttle Decision

The holding in SuperShuttle is noteworthy for several reasons.

  • First, in overruling FedEx, the Board rejected a decision that blurred the long-established lines between employees with NLRA rights, such as engaging in protected concerted activity and unionizing, and independent contractors who lack those rights. The Board, in SuperShuttle, indicated its desire to provide greater clarity to employers and workers alike on this issue, which has been recently emphasized by Chairman Ring.
  • Second, the Board overturned a holding that moved away from a common-law test, which put the Board’s jurisprudence at odds with other federal statutes, such as ERISA. Now, the standard under the NLRA falls more squarely in line with other federal laws.
  • Finally, given the D.C. Circuit’s focus on common-law principles in its recent decision in Browning-Ferris Industries of California, Inc. v. NLRB, Cases 16-1063 and 16-1064 (D.C. Cir. December 28, 2018), the SuperShuttle decision also indicates where the Board likely would come out on the joint-employer question if given the chance to handle it judicially, rather than through rulemaking.

Potential Rulemaking

Speaking of rulemaking, just a few days after the SuperShuttle decision, on January 28, 2019, NLRB Chairman Ring made a statement to Bloomberg Law, stating that the Board may propose a new regulation to further clarify whether an individual is an independent contract or employee:  “That’s the type of area where we could be able to clarify the law by using specific examples.”  Examples would provide helpful guidance to employers, particularly given the fact-intensive nature of the independent contractor inquiry.  Chairman Ring also expressed an interest in relying upon the rulemaking process to update other aspects of federal labor law in the future.  So stay tuned!

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Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Michael Lebowich Michael Lebowich

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional…

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

His broad employment law experience includes handling of race, national origin, gender and other discrimination matters in state and federal court. A significant amount of his practice is devoted to counseling clients regarding the application and practical impact of the full range of employment laws that affect our clients, including all local, state and federal employment discrimination statutes, the Fair Labor Standards Act, the Family and Medical Leave Act, and state labor laws.

Michael has substantial experience in a wide variety of industries, including entertainment, broadcasting, newspaper publishing and delivery, utilities and lodging. He represents such clients as The New York Times, BuzzFeed, ABC, the New York City Ballet, PPL, Pacific Gas & Electric, Host Hotels and Resorts, and The Broadway League (and many of its theater owner and producing members).  Michael also has significant public sector experience representing, among others, the City of New York and the Metropolitan Transportation Authority.

Michael is a frequent guest lecturer at Columbia Business School, the Cornell School of Hotel Administration, the New York University Tisch School for Hospitality, Tourism and Sports Management, and is an advisory board member of the Cornell Institute for Hospitality Labor and Employment Relations.