Wednesday, September 30, 2015

Independent contractors: everyone has an opinion

Everyone’s getting in on the act of defining who is an employee versus an independent contractor. This week, it’s the NLRB’s turn. In Sisters’ Camelot (9/25/15) [pdf], the Board determined that terminated pro-union community canvassers were employees covered by the NLRA, not independent contractors.

The employer, a nonprofit organization that collects and distributes food to low-income individuals, funds its operation primarily through donations obtained by canvassers through door-to-door solicitations. The canvassers, classified by the employer as independent contractors, attempted to organize into a labor union. When the employer found out, it terminated the services of one the ringleader, and suggested to others that organizing would be futile. Unfair labor practice charges followed.

The NLRB concluded that the canvassers are employees, not independent contractors. In so ruling, it balanced the following 11 factors:

  1. Extent of control by employer
  2. Whether the individual is engaged in a distinct occupation or business
  3. Whether the work is usually done under the direction of the employer or by a specialist without supervision
  4. Skill required in the occupation
  5. Whether the employer or individual supplies the instrumentalities, tools, and place of work
  6. Length of time for which individual is employed
  7. Method of payment
  8. Whether the work is part of the regular business of the employer
  9. Whether the parties believe they are creating an independent-contractor relationship
  10. Whether the principal is or is not in the business
  11. Whether the evidence shows the individual is rendering services as an independent business

The NLRB concluded that only two of the factors either favored independent-contractor status or were inconclusive on the issue—length of employment (which is sporadic and permits them to hold other jobs) and whether the parties believed they are creating an independent contractor relationship (with some testifying that they had signed independent-contractor agreements). The other nine, however, favored a finding of employee status:

Critically, when the canvassers work for the Respondent, they do so at times and locations determined by the Respondent. Their compensation is nonnegotiable and strictly limited by the Respondent’s time and location restrictions. Canvassers must generally use the Respondent’s tools and instrumentalities, including materials and transportation. They have no proprietary interest in any part of the canvassing operations, including their maps. They must keep accurate and detailed records as part of the Respondent’s close scrutiny of their activities. If they do not comply with the Respondent’s directives, they may be subject to discipline. Canvassers are also well integrated into the Respondent’s organization and identify themselves as part of it. The Respondent provides training, and canvassers need not have any specialized education or prior experience. While the Respondent conducts other fundraising activities beyond neighborhood canvassing, it could not fulfill its charitable mission without the canvassers, who procure most of its operating funds. Finally, there is no evidence showing that the canvassers render services as part of an independent business.

So, add labor organizing to the list of concerns employers need to have regarding independent-contractor classifications. It’s not enough to worry about whether they are employees for wage/hour purposes, workers’ comp purposes, or tax purposes, but also whether they are employees for union-organizing and other labor-relations (i.e., protected concerted activity) purposes. Even though this issue is now squarely in the NLRB’s line of sight, the suggestion on how to classify workers in close cases has not changed: unless one is clearly an independent contractor, over whom you exercise no control, the safest course of conduct is to classify that worker as an employee and not take any unnecessary legal risks.