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Not a Trump Card? Shuttle Drivers are Independent Contractors Under NLRB Test Emphasizing Entrepreneurial Opportunity

By Janet A. Hendrick
January 28, 2019

Focusing on “entrepreneurial opportunity” available to shared-ride drivers, the Republican-majority National Labor Relations Board handed employers a victory on January 25, 2019 by holding that Dallas-Fort Worth area SuperShuttle drivers are independent contractors, rather than employees who may unionize. The decision, which overturns a 2014 decision that favored workers, will make it easier to classify workers as independent contractors, but has no effect on state or federal wage and hour laws.

In SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338 (Case 16–RC–010963), by a 3-1 party-line vote, the employer-friendly Board continued with its reversal of Obama-era decisions that favored employees.  The case arose when the union sought to represent a unit of shuttle drivers, including about 90 franchisees.  In August 2010, the Board’s Acting Regional Director found the franchisees were independent contractors, not employees, and dismissed the union’s petition for representation. The union appealed and last week’s decision was the final nail in the coffin for the union.

The decision is a good overview of how the NLRB analyzes whether a worker is an employee, who may unionize, or an independent contractor, who may not. The Board applies a 10-factor test (which differs from other agency tests, such as the IRS 20-factor test), none of which is controlling:

  1. Extent of control by the company over the detail of the work;
  2. Whether the worker is engaged in a distinct occupation or business;
  3. The kind of occupation and whether the work is usually performed with or without supervision;
  4. Required skill in the particular worker’s occupation;
  5. Whether the company or the worker supplies the tools and place of work for the worker;
  6. The worker’s length of tenure with the company;
  7. Whether the worker is paid by time or by job;
  8. Whether the work performed by the worker is part of the regular business of the company;
  9. Whether the parties believe they are in an employer-employee relationship; and
  10. Whether the principal is or is not in the business.

There is no “bright-line rule” and no “shorthand formula” for determining whether a worker is an employee or not, and the total factual context must be assessed and weighed.

The SuperShuttle Board returned to the traditional common-law test for determining independent contractor status and overruled the Obama Board’s 2014 decision in FedEx Home Delivery (361 NLRB 610) (“FedEx II”), which the federal court of appeals for the D.C. Circuit vacated.  In FedEx II, the NLRB held that FedEx drivers were employees, declining to adopt an earlier court decision that involved the same parties and held that the drivers were independent contractors.  That earlier decision viewed the common-law factors “through the lens of entrepreneurial opportunity,” rather than focusing on “an employer’s right to exercise control” over the workers’ job performance.  The Board in SuperShuttle found the FedEx Board “impermissibly altered the common-law test” to one of “economic dependency,” a test Congress specifically rejected.

Noting that the NLRB has long considered entrepreneurial opportunity as part of the independent contractor analysis, the SuperShuttle Board analyzed the common-law factors to find in favor of SuperShuttle, shutting down the union’s efforts to represent the drivers.  The key factors in the Board’s decision were:

  • The franchisees’ significant initial investment in their business by purchasing or leasing the primary instrumentalities for their work—a van (as well as gas, tolls, and repairs) and the dispatching system–and execution of an agreement with SuperShuttle (Unit Franchising Agreement), which states in bold capital letters “FRANCHISEE IS NOT AN EMPLOYEE OF EITHER SUPERSHUTTLE OR THE CITY LICENCEE”;
  • The franchisees’ almost unfettered opportunity to meet or exceed their overhead, as they have total control over how much they work, when, and where and they keep all fares they collect;
  • Analogy of the shuttle drivers to taxi drivers, whom Board precedent holds are independent contractors, largely because they retain all fares they collect and the cab companies lack control over the manner and means by which the drivers conduct business;
  • The franchisees’ agreement to indemnify SuperShuttle against all claims relating to their actions, greatly lessening SuperShuttle’s motivation to control the franchisees’ actions;
  • Although the franchisees are subject to several requirements, including dress and grooming standards and van inspections, these requirements are imposed by state-run DFW Airport, not SuperShuttle;
  • The franchisees’ near-absolute autonomy in performing their work;
  • SuperShuttle does not provide benefits, sick leave, vacation, or holiday pay to the franchisees, or withhold taxes or payroll deductions;
  • Five of the franchisees are corporations.

Although some of the factors indicated employee status (such as no particular skill/specialized training and the fact that the drivers’ work is an integral part of SuperShuttle’s business), the NLRB found that none of these outweighed the factors supporting independent contractor status.

The SuperShuttle Board explained that entrepreneurial opportunity is not “a trump card” in the independent contractor analysis, but rather a “prism” through which to evaluate the 10 common-law factors “when the specific factual circumstances of the case make such an evaluation appropriate.”  So, where a qualitative evaluation of common-law factors shows significant opportunity for economic gain and significant risk of loss, the worker is likely an independent contractor and not permitted to unionize.

Although the SuperShuttle decision is without doubt a victory for employers, employers should remember the decision is not binding on other agencies, such as the Department of Labor, which enforces federal wage and hour laws.


Janet Hendrick Profile portrait

Janet A. Hendrick

If you have questions about this decision, contact Janet Hendrick,who represents and counsels employers on issues including proper classification, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

NLRB Ditches Browning-Ferris Joint Employer Test

Published on December 14, 2017

NEW YORK — A divided National Labor Relations Board on Thursday erased the landmark expansion of its test for determining joint employment that it had issued in the 2015 Browning-Ferris Industries case, voting along party lines to revert back to its previous standard.

Thursday’s NLRB majority said that while the panel in Browning Ferris Industries was driven by a “well-intentioned” desire to protect employees’ collective bargaining rights with third parties, the standard it created has five “major” problems. (AP)

In the 3-2 vote, the board’s Republican members overturned the standard set in BFI that under the National Labor Relations Act, a company and its contractors or franchisees can be deemed a single joint employer even if the company hasn’t exerted overt control over workers’ terms and conditions.

The majority was composed of NLRB Chair Philip Miscimarra, who penned a dissent in BFI, and the board’s two newest members, Bill Emanuel and Marvin Kaplan. Democratic members Mark Gaston Pearce and Lauren McFerran, who were both in the majority in BFI, issued a joint dissent.

“We return today to a standard that has served labor law and collective bargaining well, a standard that is understandable and rooted in the real world,” the board majority said. “It recognizes joint employer status in circumstances that make sense and would foster stable bargaining relationships.”

In the BFI decision, the majority had determined that Browning Ferris was a joint employer of recycling workers provided by staffing agency Leadpoint Business Services Inc. at a BFI-owned recycling facility in Milpitas, California.

Before the BFI ruling, the NLRB’s test rested on a business having “direct and immediate” control over terms and conditions of employment. In Browning-Ferris, the board revised the standard to include “indirect control” or the ability to exert such control.

In Thursday’s ruling, the board returned to its “direct and immediate” control standard, saying the BFI test confused the definition of a joint employer and threatened to produce “wide-ranging instability” in bargaining relationships.

“A finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine,’” the board majority said. “We think that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations Act,] it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”

The NLRB majority said that while the panel in BFI was driven by a “well-intentioned” desire to protect employees’ collective bargaining rights with third parties, the standard it created has five “major” problems. Among them are that the BFI test exceeds the board’s statutory authority and that the change the board wrought regarding the NLRA’s definition of “employer” “is solely within the province of Congress.”

The majority also said that to the extent the BFI decision sought to correct a perceived inequality in the amount of bargaining leverage workers had due to complex business relationships, that inequality “was the wrong target, and expanding collective bargaining to an employer’s business partners was the wrong remedy.”

“Business entities enter into a variety of relationships, and they have different interests and varying degrees of leverage in their dealings with one another,” the panel majority said Thursday. “There are contractually more powerful business entities and less powerful business entities, and all pursue their own interests. The board would need a clear congressional command — and none exists here — before undertaking an attempt to reshape this aspect of economic reality.”

Using the pre-BFI test, the board on Thursday upheld a ruling by Administrative Law Judge Robert Ringler that Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., which are construction companies owned by the same individuals, were joint employers and both liable for illegally firing seven employees who had gone on strike to protest their wages and working conditions.

In a joint dissent, Pearce and McFerran said the Hy-Brand ruling brought back a restrictive test, wasn’t the proper vehicle for revisiting the joint employer standard at all since it was really a single employer case and resulted from “a deeply flawed process” meant to achieve a desired result quickly.

The dissenters argued that the board majority failed to examine relevant data and articulate a satisfactory explanation for its action as required under the Administrative Procedure Act, saying the decision “bears little relationship to the facts, which, as explained, do not fairly present a genuine joint-employer issue.”

The board majority also failed to notify the public that a reversal of precedent was under consideration, and didn’t solicit briefs — a process followed before deciding the BFI case, according to the dissent.

“Even a cursory glance at today’s decision reveals that the majority’s policy basis for overruling BFI is entirely speculative: pages upon pages bemoaning the changes supposedly wrought by BFI and their potential catastrophic effects, but no real-world examples or even remotely plausible hypotheticals,” Pearce and McFerran said. “It is reasonable to infer that our colleagues do not want to engage the public for fear of what they might learn — namely, that none of the predicted effects of BFI have actually come to pass.”

The respondents were represented by Stanley Niew of the Law Offices of Stanley E. Niew PC.

The NLRB general counsel was represented by Patricia Hollis McGruder.

The case is Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., case numbers 25–CA–163189, 25–CA–163208, 25–CA–163297, 25–CA–163317, 25–CA–163373, 25–CA–163376, 25–CA–163398, 25–CA–163414, 25–CA–164941, and 25–CA–164945, all before the National Labor Relations Board.