NLRB Imposes New Standard for Determining Who’s an Employee and Who’s a Contractor

NLRB new standard for determining employee or contractor, employer-employee relationship under the revised NLRB standard, legal implications for companies using contract labor or consultants

By decision issued on June 13, the National Labor Relations Board (“NLRB”) overturned a business-friendly standard for determining whether workers are employees or independent contractors under the National Labor Relations Act (“NLRA”).  The NLRA provides employees (but not independent contractors) with certain protections, including rights to organize and join unions. This shift is in the NLRB’s standards is of considerable relevance to companies that heavily rely on contract labor or gig workers.

Under the “new” standard, the NLRB will now consider the following factors in determining whether a worker is an employee or contractor in relation to an employer:  

  • the extent of control which that the alleged employer may exercise over the details of the work;
  • whether or not the worker is engaged in a distinct occupation or business;
  • whether the work is usually done under the direction of the employer or by a specialist without supervision;
  • the skill required in the particular occupation;
  • who supplies the instrumentalities, tools, and the place of work for the person doing the work;
  •  the length of time for which the person is employed;
  • the method of payment, whether by the time or by the job;
  •  whether or not the work is a part of the regular business of the employer;
  •  whether or not the parties believe they are creating the relation of employer and employee; and
  • whether the principal is or is not in business.

Takeaways:  Employers that contract with labor, contractors or consultants should realize that it will now be easier for those workers to establish that they were employees under the NLRA and that, as employees, they should have received certain benefits, wages, and protections.