Trump Labor Board Appointees Rule Against Workers Unfairly Labeled Independent Contractors

Mark Gruenberg Editor, Press Associates Union News

The Trump-named GOP majority on the National Labor Relations Board “celebrated” Labor Day a few days before the actual date – by giving bosses, not workers, another gift-wrapped ruling.

By a 3-1 vote on Aug. 29, over the strong dissent of sole Democrat Lauren McFerran, the majority declared that just because the boss arbitrarily declares workers are “independent contractors” does not mean the boss automatically breaks labor law.

The ruling is important for the nation’s workers, especially when the so-called “gig economy” is growing. Firms in that sector, such as AirBnB and the ride-sharing firms Uber and Lyft, arbitrarily declare their workers “independent contractors.”

When workers are “independent contractors” under labor law, unions can’t organize them. The boss also doesn’t have to pay workers comp, Social Security and Medicare payroll taxes or money to cover unemployment benefits.

If a worker is an “employee” under labor law, the law covers the worker. And that includes the right to organize, as well as Social Security, Medicare, workers’ comp and jobless benefits payments by the firm for all the covered workers.

The board majority used a case involving Jeannie Edge, a driver for Velox Express, Inc., a transporter of medical specimens from Arkansas and western Tennessee to a lab. Velox arbitrarily called all its drivers “independent contractors.”

The drivers complained they were really employees, since Velox controlled everything about the job, except for ordering them to buy their own vehicles. Edge spoke for the group and Velox fired her in retaliation three years ago.

The board used the case to discuss the whole independent contractor dodge. The AFL-CIO, the Teamsters, the Plumbers and Pipefitters and the Carpenters all filed briefs backing Edge. So did the National Employment Law Project. The Chamber of Commerce, other corporate lobbies and one right-wing ideological group sided with Velox.

The NLRB’s administrative law judge found Velox broke the law by arbitrarily classifying all the drivers as contractors and by firing Edge. The judge ordered her reinstated with back pay and ordered Velox to post a we-won’t-do-it-again notice. The board majority agreed with the judge. It said the drivers are really employees – but that the arbitrary decision to call them contractors does not, by itself, automatically break labor law. 

“The board has never previously found an employer’s misclassification of its employees as independent contractors standing alone, is a per se violation of the (National Labor Relations) Act.” the board’s GOP majority, led by Chairman John Ring, said. “An employer does not violate the act by misclassifying its employees as independent contractors.”

Mere misclassification “does not prohibit the workers from engaging in” measures to protect themselves and advance their rights and their cause at work, the majority said. “It does not threaten them with adverse consequences for doing so, or promise them benefits if they refrain from doing so.”

If the workers stand up and say they’re employees, and “the employer responds with threats, promises, interrogations, and so forth, then (NLRB’s emphasis) it will have violated” labor law, “but not before.”

Thus Velox broke the law by firing Edge when she spoke up for herself and her colleagues and challenged their classification as independent contractors. Other firms would break the law, too. But Velox didn’t break the law by misclassifying the workers in the first place, or by telling the workers they’re independent contractors, the majority said.

As a matter of fact, they added, any boss has to jump through so many legal hoops – including state and local laws as well as the NLRA – to call workers “independent contractors” that arbitrarily banning that “would significantly chill creation“ of independent contractor jobs.

McFarren said the board majority was right to slam Velox for firing Edge and that Velox flunked the 11-part test that decides whether any workers are “employees” or “independent contractors.” But it got the principle wrong, and that has a chilling effect on workers, she said.

“When the employer fired one of the drivers, Jeannie Edge, for complaining about her misclassification, it violated the act. The majority correctly finds the drivers were employees” under labor law, “even under the too-strict test the board now uses.”

“But the majority gets two important issues wrong. First, (in) reaching out to decide an issue unnecessarily -- whether misclassifying employees as independent contractors, standing alone, violates the Act – the majority fails to recognize misclassification itself chills” workers’ ability to exercise their rights.

“Second, the majority fails to fully remedy the violation it does find. By not requiring the employer to treat all of its drivers as employees and to notify them of that fact, the drivers are left in the dark about their” protection by labor law “and chilled from exercising their rights.”

“The majority’s finding that misclassification alone does not violate the act” – the majority’s Labor Day gift to the bosses – “is wrong. The issue turns on whether misclassify-cation reasonably tends to chill employees from acting on their statutory rights. Such a chilling effect occurs whenever employees reasonably would believe exercising their rights would be futile or would lead to adverse employer action.”



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