From JDSupra, Regina Petty and Grant Wills discuss a recent decision by the National Labor Relations Board (NLRB) that said misclassifying workers as independent contractors does not constitute an unfair labor practice. Regina and Grant write:
Employers found to have misclassified employees as independent contractors will no longer face the prospect of unfair labor practice charges for such actions alone, according to a new ruling handed down yesterday by the National Labor Relations Board. Although the NLRB’s previous General Counsel and several administrative law judges had previously concluded that hiring entities could face the one-two punch of misclassification litigation followed by a federal labor law violation, the current Board wiped this concern off the table with its August 29 ruling in Velox Express, Inc. What do businesses need to know about this positive development?…
The majority ruled that Velox Express did not interfere with workers’ Section 7 rights by misclassifying them as independent contractors because it did not “inherently threaten” them with discipline if they were to act in concert for their mutual aid or protection. “Employees may well disagree with their employer, take the position that they are employees, and engage in union or other protected concerted activities,” the Board said. “If the employer responds with threats, promises, interrogations, and so forth, then it will have violated the NLRA, but not before.”
In so holding, the Board agreed with Velox Express’ position that it merely expressed a legal opinion when it informed workers that they were independent contractors. The Board reasoned that any such statement, “even if that opinion is ultimately mistaken,” is actually protected by law so long as it “does not, in and of itself, contain any threat of reprisal or force or promise of benefit.”
The Board concluded that to rule against Velox Express would “significantly chill the creation of independent contractor relationships,” as businesses would then be reluctant to pursue any course of action that could land them in hot water despite good faith belief and intent. Reversing the ALJ’s ruling and scrapping this theory of liability would, according to the majority, provide a small measure of certainty, which is important for parties forming business relationships.