On Aug. 29, the National Labor Relations Board (NLRB) held that an employer's misclassification of its employees as independent contractors does not, standing alone, constitute a violation of the National Labor Relations Act (NLRA). Velox Express Inc. 15-CA184006, 368 NLRB No. 61. The NLRB reasoned that an employer's mere communication to its workers that they are independent contractors does not prohibit, or otherwise interfere with, the workers' rights to organize under Section 7 of the NLRA, as is required for a violation of Section 8(1)(a). Indeed, the NLRB held that such communications are privileged legal opinions under Section 8(c) of the act – even when the classification turns out to be incorrect.
In determining that an employer's misclassification is not a violation on its own, the NLRB focused on the complicated, fact-specific nature of independent contractor determinations. The NLRB recognized that these determinations are governed by a variety of complex federal, state and local regulations, and "[u] nderstandably, employers struggle to navigate this legal maze." As a result, the NLRB noted that "reasonable minds can, and often do, disagree about independentcontractor status when presented with the same factual circumstances." In light of these considerations, the NLRB held that creating a stand-alone violation for misclassification of employees would not only penalize employers whenever they were mistaken, but also would "significantly chill" the creation of independent contractor relationships. The NLRB found that such a result would be contrary to both Supreme Court precedent and Congress' intention when amending the act to exclude independent contractors from its scope. As a result, the NLRB declined to hold that an employer's misclassification of its employees as independent contractors is itself a violation of the NLRA.
However, the NLRB held that Velox did, in fact, violate the NLRA when it terminated its employee after she complained about being misclassified as an independent contractor. Although the misclassification alone was not an NLRA violation, the adverse action taken against the employee in response to her complaint was. Thus, employers should remain cautious when making classification decisions and acting pursuant to those decisions.
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