- Employers do not violate the National Labor Relations Act (NLRA) by misclassifying employees as independent contractors, according to a decision published by the National Labor Relations Board (NLRB) on Aug. 29.
- The decision comes after the board asked for briefing in this case, Velox Express, Inc. and Jeannie Edge, in February 2018. In 2017, an NLRB administrative law judge found that Velox Express violated the NLRA by listing its employees contractors — a move that would have prohibited them from unionizing.
- After considering the briefs it received, the board ruled differently. It applied its ruling in a case from earlier this year, SuperShuttle DFW, and found that Velox Express incorrectly classified its employees as independent contractors and violated the NLRA by firing a worker for "raising group complaints" about classification. The board also ruled, however, that Velox Express did not commit a separate violation by classifying them wrongly as independent contractors.
This ruling is a "good win for employers," according to Todd Lyon, a partner at Fisher Phillips. The decision makes it so "employers do not have to worry about getting hit with a double whammy," he told HR Dive in an interview. "Whether employers or independent contractors, that classification in and of itself is not going to be considered illegal."
The board's decision does not free employers of other considerations that come alongside the question of classification. "This removes the labor relations piece of it," Lyon said. "It takes one additional area of liability off the table." Employers may still run into legal trouble with the Fair Labor Standards Act, worker compensation, taxation issues and unemployment if they misclassify employees as independent contractors.
This decision doesn't completely remove the NLRA from the discussion of classification, either. Employers will still need to consider how they will deal with independent contractors who try to organize. The NLRA does not protect independent contractors, but an employer could land itself in hot water if it disciplines employees who have been misclassified as independent contractors for trying to unionize.
The issue of classification has been a major consideration within the transportation industry over the last few years. In 2017, FedEx settled a misclassification suit with 12,627 driver-plaintiffs for $227 million. XPO has reached $16.5 million and $5.5 million in settlements in recent months as a result of misclassification allegations.
Workers often allege that these companies have a significant amount of control over their day-to-day work, arguing the lack of flexibility makes them more like an employee than a contractor. Workers say this classification allows employers to skirt obligations like overtime and meal breaks.