MISCLASSIFYING WORKERS AS INDEPENDENT CONTRACTORS DOES NOT VIOLATE LABOR ACT

The National Labor Relations Board (NLRB) ruled on August 29, 2019 that employers do not violate the National Labor Relations Act (NLRA) solely by misclassifying employees as independent contractors.  The Board majority held that an employer's communication to its workers of its opinion that they are independent contractors does not, standing alone, violate the NLRA even if that opinion turns out to be mistaken.  According to the decision, such communication does not inherently threaten those employees with termination or other adverse action if they engage in activities protected by the NLRA, nor does it communicate that it would be futile for them to engage in such activities.  Velox Express, Inc., 368 NLRB No. 61. 

Editor's Note:  This NLRB ruling is critically important, as otherwise the contractor status of many entities across the country could have been put in doubt by the simple filing of a charge with the NLRB.  Instead, the NLRB decided that future legal battles about misclassification are to be decided in this context in other tribunals.

It should be noted that the outcome may have been different had the respondent in the case indicated to its workforce that union organizing or other protected concerted activities would be futile, or threatened purported independent contractors with reprisal for taking such actions.  The ruling left room for the finding of a violation in such circumstances, as all the Board did in the Velox case was to rule that an employer's communication of its position that its workers are independent contractors does not threaten reprisal or futility.