The National Labor Relations Board (“NLRB”), in its June 13, 2023, The Atlanta Opera, Inc., decision, modified the standard for determining whether a worker is an employee or an independent contractor under the National Labor Relations Act (the “Act”). The ruling sees the NLRB return to its employee-friendly standard first issued back in 2014 and will make it more difficult for individuals to maintain their independent contractor status.
The Road Leading to The Atlanta Opera, Inc. Standard
Under the Act, workers who are classified as independent contractors are excluded from the definition of a statutorily covered employee. Only employees covered by the Act have the statutory right to join a union, engage in collective bargaining, and engage in “protected concerted activity” under the Act.
The old standard (which Atlanta Opera adopts as the current standard) was first issued in 2014 under the Obama Administration and made it more difficult for workers to maintain their status as independent contractors. That standard was then overturned by the NLRB in 2019 under the Trump Administration.
The 2019 standard highlighted the factor of entrepreneurial opportunity as “the overriding consideration in all but the clearest cases” and as the “single animating principle” in the independent contractor analysis. Under the 2019 standard, the NLRB assessed whether a worker would make a profit or loss based on their efforts at work. If a worker has more independence as an entrepreneur, it is likely they would be classed as an independent contractor and be excluded from coverage under the Act. The 2019 standard instructed that the analysis of whether a worker is an independent contractor or an employee should be through an entrepreneurial lens.
What Does Atlanta Opera Say?
The Atlanta Opera decision is hypercritical of the 2019 standard and summarily rejects its holding. In Atlanta Opera, the NLRB returned to the 2014 standard and explained that “all of the incidents of the [employment] relationship must be assessed and weighed with no one factor being decisive.” This involves an analysis of each common law factor in the Restatement (Second) of Agency § 220. Those factors are:
- The extent of the employer’s control over the details of the work;
- Whether the worker is engaged in a distinct occupation or business;
- Whether the work is usually done by a specialist without supervision;
- The skills required for the job;
- Whether the employer supplies the tools and the place of work;
- The length of time for which the person is employed;
- The method of payment;
- Whether the work is part of the regular business of the employer;
- Whether the parties believed they created an employer-employee relationship; and
- Whether the employer is or is not in business.
Additionally, the NLRB held that the entrepreneurial opportunity factor would not be given any special weight when reviewing whether workers are employees or independent contractors. In Atlanta Opera, the Board found that the workers at issue, including makeup artists, wig artists, and hairstylists working at The Atlanta Opera, are employees and not independent contractors after analyzing the common law factors. Board Member Kaplan, in his dissent, concluded that the workers at issue should be treated as employees, not contractors, under the overturned 2019 standard.
What Happens Next?
Atlanta Opera is subject to appeal, and it is possible that it may be vacated by the D.C. Circuit. As this decision is a return to the 2014 standard, this new decision may be vacated just like its 2014 predecessor. That said, an appeal may not be noted as all participating Board members concluded that the workers at issue were employees.
Employers should be aware that Atlanta Opera will make it more difficult for independent contractors to maintain that status. In particular, gig economy companies and businesses that rely on many independent contractors should assess their workforce with the common-law factors noted above.
Employers should note that this decision is an expected one as the NLRB is a political body that teeter totters from being employee friendly to employer-friendly with each new presidential administration.
Berenzweig Leonard will continue to monitor updates and developments related to Atlanta Opera. Please contact us if you have questions or concerns about the impact of the Atlanta Opera case and whether the reclassification of workers within your workforce is appropriate.
Samy Abdallah is an Associate Attorney at Berenzweig Leonard. He can be reached at sabdallah@berenzweiglaw.com.