The NLRB Says You’ve Misclassified Your Worker(s)…But Does It Matter?

The worker classification issue continues to heat up. In addition to the IRS, the DOL and their state counterparts,  the NLRB has also gotten into the act. We established that in our discussion in last week’s post. Click here if you missed it. If you’re already on top of this issue with respect to IRS, DOL and state requirements though, then maybe there really isn’t anything else you have to worry about? Well, um, yes there is more. Would I bother with a whole post on this issue (two if you count last week’s post) if there were no additional impact? So what is the impact? Let’s find out– you guessed it– after the jump…

OK so we know that the IRS the DOL and their state counterparts have their tests for determining whether a worker is properly classified as an independent contractor or employee. (Click here, here and here to learn more about that, or for review.) Now the NLRB is involved–and it has its own test, with a new factor, which we also looked at in last week’s post.  The first consequence, then, is that you now have to be familiar with yet another test. What else? If you have been on top of this issue up until now, you will now have to once again re-visit your relationship with your independent contractors to make sure that their classifications will now pass NLRB muster. If your workers already meet the new NLRB test (and if future IC’s do) then the NLRB’s involvement really shouldn’t impact you. But what if they don’t?

If your IC’s are really — according to the NLRB– employees, then what happens? The good news: this finding of misclassification won’t result in back taxes or penalties or back wages. Under the right circumstances though, these workers would have the same NLRA rights that your employees have, including:  a) the right to file an Unfair Labor Practice charge against you if you try to stop them from discussing work conditions with each other or with your other workers and; b) the right to organize or join in the organization of a union. It is perhaps that second element that will give many employers pause. Up until now you may have an entire group of workers that you classified as independent contractors, and that you assumed were not eligible to join a union. With the NLRB’s new test you might find out — surprise– that in fact they can join a union. The NLRB’s focus on worker classification could lead to unions relying on the NLRB’s recent decision to target companies with independent contractors, and recruiting those workers.

So more people might be able to join a union. Is that so bad? If most of your workforce is already unionized, maybe not. But what if currently, none of your workers are represented by a union? Or what if some are but many are not? Can you make your peace with having to bargain with a union? Well yes, but that is really a subject for another post or series of posts. The point, though, is that the NLRB’s new position and its recent decisions (and actions) signal that, if anything, the presence and influence of unions in your workplace may be back on the increase.

It doesn’t stop there, however. As long as the FedEx Home Delivery decision is in effect, the NLRB has yet another means of involving itself in your daily life. The NLRB, through what we’ll refer to as a more proactive approach in the last several years has found ways to increase its role in non-unionized workplaces. It is clear that the NLRB is doing all it can to revive unions, by: a) making it easier for workers to organize a union, and b) to limit an employer’s ability to head off unionization in its workplace. The idea is for both the NLRB and unions to once again play a larger role in the workplace.

Now, as I mentioned last week, Fed-Ex has appealed the NLRB decision to the D.C. Circuit Court of Appeals. Even if the NLRB loses the appeal, however, it may choose not to back down. (Remember Circuit Court decisions are only binding on that particular jurisdiction). It can either appeal to the US Supreme Court or simply choose not to give any deference to the decision unless or until the US Supreme Court affirms it on an eventual appeal.

Does this mean you cannot  or should not use independent contractors? If you do, are you a sitting duck for unions and the NLRB? No, absolutely not. If you’ve followed The EmpLAWyerologist up until now, you know we try to stay away from gloom and doom and instead give you some practical proactive solutions whenever possible. This time is no exception, so here they are:

1. Re-evaluate any worker that you have classified as an independent contractor in light of Fed-Ex Home Delivery and its 11-factor test;
2. Consult with an employment attorney about the above;
3. Re-classify any workers determined to be misclassified;
4. If you determine that any of your independent contractors are properly classified document that conclusion and your reasoning;
5. Take proactive steps to ensure open, ongoing dialog with your employees and take reasonable steps to address complaints whenever possible. Very often these steps in particular can go a long way toward minimizing the chances of your employees feeling a need to join or organize a union in the first place.

Remember, though, as with pretty much any other NLRB issue this is likely not the last we’ll hear about it. Stay tuned for appeals. Again, we might even hear from SCOTUS eventually. Until then, see you next week!

Disclaimer: Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.

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