Please be advised that contacting Ruder Ware by e-mail does not create an attorney-client relationship. If you contact the firm by e-mail with respect to a matter where the firm does not already represent you, any information which you disclose to us may not be regarded as privileged or confidential.


Accept   Cancel

Please be advised that contacting Ruder Ware by e-mail does not create an attorney-client relationship. If you contact the firm by e-mail with respect to a matter where the firm does not already represent you, any information which you disclose to us may not be regarded as privileged or confidential.


Accept   Cancel

PAL Login

linkedin.jpgyoutube.jpgvimeo.jpgtwitter_off.png View Ruder Ware

Employment Blog

NLRB Attacks Independent Contractor Status

Authored by Dean R. Dietrich
Posted on November 25, 2014
Filed under Employment

A recent decision by the National Labor Relations Board has attacked the test that is generally used to determine whether or not an individual is an independent contractor or is considered an employee eligible for voting to be represented by a union. In the recent decision of FEDEX Home Delivery, 361NLRB No. 55 (2014), the NLRB issued a decision that departed from recent federal court decisions and held that the FEDEX drivers were not independent contractors because they were not “rendering services as part of an independent business.” In other words, the NLRB found that the company exercised a high-level of control over how the work was performed by these drivers and therefore held they were not an independent contractor but rather an employee of the company eligible to vote for union representation.

The importance of this decision is that it contradicts the decisions made by several federal courts that relied upon the individuals “entrepreneurial opportunity for gain or loss” as a very important factor in determining whether someone was an independent contractor. This factor centered around the opportunity of the individual to engage in a business activity and enjoy the fruits of performing the work as an independent “entrepreneur” that was working for himself rather than for a company. This “entrepreneurial opportunity for gain or loss” test is what had been relied upon by various federal courts to hold that an individual was an independent contractor because they enjoyed the fruits of their labor rather than simply working for someone else.

There are a number of tests regarding independent contractor status. One test applies to worker's compensation benefits, another test applies to unemployment compensation benefits and another test applies to whether the employee is covered under the Fair Labor Standards Act. All of these tests center around whether the employee is engaged in a separate business or whether the company has the right to control the activities and work of the individual. The movement by the National Labor Relations Board focuses more on the right to control test and is another weakening of the ability of a company to operate its business in the manner in which it is best suited which could include hiring independent contractors to perform work that also benefits the company. 

It is not often this issue arises in existing companies but caution must be exercised because the efforts of the NLRB are to find that individuals are employees of the company and therefore eligible to vote for union representation. Employers should be careful in their characterization of an independent contractor to make sure that all of the tests are met to avoid potential employee liability.