NLRB Adopts New Test for Independent Contractor Misclassification

From the BakerHostetler Employment Law Spotlight — “The NLRB has tossed a new vegetable into the enormous salad of independent contractor misclassification tests. As companies might expect, the new vegetable smells rotten.

Companies who wish to analyze whether their non-employee workers are properly classified as independent contractors must now contend with a new NLRB test, in addition to the IRS Right to Control Test (used for federal tax purposes), common law Right to Control Test (used for ERISA and federal discrimination law purposes), modified Treasury version of the common law Right to Control Test (used for Affordable Care Act purposes), Economic Realities Test (used for Fair Labor Standards Act purposes), and the multitude of varying state law tests used for state wage and hour laws, workers compensation, and unemployment.

It’s enough to give employers a stomach ache….

When determining who is an employee eligible to join a union, the NLRB will now weigh the eleven factors listed below. The Board unhelpfully adds, in commentary, that the weight it will choose to assign to each factor “will depend upon the factual circumstances of the particular case.” (Which translated into non-legalese most likely means, “will depend upon the outcome the Board wishes to reach.”) In any event, here are the eleven factors:

  1. Extent of control by the employer
  2. Whether or not 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 instrumentalities, tools, and place of work
  6. Length of time for which individual is employed
  7. Method of payment
  8. Whether or not work is part of the regular business of the employer
  9. Whether or not the parties believe they are creating an independent contractor relationship
  10. Whether the principal is or is not in the business
  11. (New:) Whether the evidence tends to show that the individual is, in fact, rendering services as an independent business

Read the full story at NLRB Adopts New Test for Independent Contractor Misclassification

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