Labor Relations NLRB Returns To Previous Test For Determining Independent Contractor Status.

Section 2(3) of the National Labor Relations Act (NLRA) excludes independent contractors from coverage. To determine whether a worker is an employee or independent contractor, the National Labor Relations Board (NLRB) considers 10 different factors, including, among other factors: the extent of control the employer exercises over the details of the work; whether the work is done under the direction of the employer or without supervision; whether the employer is engaged in a distinct occupation or business; how much skill is required; whether the employer supplies the tools and place of work; and the method of payment, whether by the hour or by the job.

In 2019, the NLRB ruled in SuperShuttle DFW, Inc., that the 10 different factors should be evaluated through the “prism of entrepreneurial opportunity.” In other words, entrepreneurial opportunity should be the animating principal of the test, and afforded special weight relative to the other factors. The more opportunity workers possess, the more likely they are independent contractors.

On June 13, 2023, the NLRB ruled in Atlanta Opera, Inc. that it would return to the prior, more employee-friendly standard for determining whether workers are employees or independent contractors by applying a holistic analysis of the 10 factors. Under the holistic method, “entrepreneurial opportunity” is one of several non-dispositive factors, and the analysis should be fact-intensive.

In this case, the issue before the NLRB was whether makeup artists, wig artists, and hairstylists (collectively known as stylists) are employees of The Atlanta Opera or independent contractors. The Make-up Artists and Hair Stylists Union, Local 798, IASTE filed a petition to represent the stylists. The Opera asserted that the stylists are independent contractors and therefore not covered by the act.

For each production at the Opera, the director chooses a wig and makeup designer, who is part of the director’s design team and who works closely with lighting and costume designers to effectuate the director’s vision. The wig and makeup designer works with a wig and makeup department head, who seeks out other qualified hair, wig, and makeup artists to execute the styles for each character.

These stylists do not work pursuant to written contracts; they agree to an hourly pay rate and fill out timesheets accordingly. Stylists are not on the Opera’s payroll, receive different rates of pay, and are designated as vendors. Each stylist must fill out a W-9 tax form and a direct-deposit form. The Opera keeps financial records regarding the work of the stylists, but not any other records or personnel files for them. The Opera does not provide any training or orientation and the stylists generally do not wear uniforms, except that they are expected to wear black for the productions to minimize their visibility to the audience. Stylists are not subject to the Opera’s rules and regulations except for the Opera’s infectious disease policies. The stylists’ schedules are dictated by the Opera’s rehearsal and performance schedule and selected based on their availability for the entirety of a production.

Typical job responsibilities include applying makeup; preparing, fitting, and fastening wigs; styling performers’ natural hair; creating special makeup effects (e.g., wounds, aging, or facial hair); working with the audio department to attach microphones; working with the wardrobe department to integrate wig styles with costumes; and removing performers’ makeup, wigs, and microphones after the performances.

Applying the 10 factors in a holistic manner, the NLRB determined that the stylists are employees and not independent contractors. Specifically, the NLRB said that the following factors point toward employee status: the Opera controls the details of the stylists; the Opera directs stylists’ work via continuous feedback from the director; the Opera supplies the tools, instruments, and places of work; the Opera pays the stylists an hourly rate with a fixed number of working hours; the stylists’ work is part of the regular business of the employer; and the Opera is in the same business as the stylists. The factors weighing in favor of the stylists being independent contractors were their distinct occupation, their skill, and their length of employment. However, considering the various factors holistically, the NLRB concluded that the evidence showing an employment relationship outweighed the evidence supporting independent contractor status.

AtlantaOperaHouse,Inc., 371 NLRB No. 45 (June 13, 2023).

Note:

This test for determining independent contractor status is important for nonprofit organizations to consider when determining whether the NLRA applies to certain workers. California has a separate independent contractor test for determining whether certain California laws, including importantly wage and hour laws, apply to workers. California’s test has more stringent requirements for a worker to be considered an independent contractor.

Non-Compete Clauses Deemed Violation Of NLRA.

On May 30, 2023, the General Counsel of the National Labor Relations Board (NLRB) issued a memorandum clarifying that requiring employees to sign noncompete agreements to obtain or keep their jobs, or as part of severance agreements, interfere with employees’ exercise of their rights under Section 7 of the National Labor Relations Act (NLRA).

Section 7, in particular, protects employees’ right to self-organization, to form, join, or assist labor organizations, and to bargain collectively. The General Counsel said that non-compete provisions are overbroad and reasonably tend to chill employees in exercising their rights under Section 7 when the provisions deny employees the ability to quit or change jobs. For example, the provisions interfere with Section 7 if they cut off employees’ access to other employment opportunities that they are qualified for based on experience, aptitude, and preferences as to type and location of work.

Generally speaking, this denial of access to employment opportunities is a violation of Section 7 activity because employees know they will have greater difficulty replacing their lost income if they are discharged for organizing and acting together to improve working conditions. In addition, an employer’s former employees are unlikely to reunite at a local competitor’s workplace, and therefore be unable to leverage their prior relations to encourage each other to exercise their rights to improve working conditions in their new workplace.

The General Counsel also noted that non-compete provisions can be construed as denying employees the ability to quit or change jobs by cutting access to other employment opportunities.

The full opinion letter can be found here

Lion Elastomers LLC: Setting-Specific Standards For Evaluating Employee Misconduct.

On May 1, 2023, the National Labor Relations Board issued a decision in Lion Elastomers LLC II, overruling General Motors LLC and returning to the long-established precedent of three different settingspecific standards for employees who are disciplined or discharged for misconduct that occurs during activity otherwise protected by the National Labor Relations Act (e.g., employee activities related to employee’s hours, wages, and working conditions). The Board had previously made it easier for employers to sanction misconduct that takes place as part of protected activity. In overruling General Motors, the Board noted that labor disputes are often heated and the Board reaffirmed that employees must be given some leeway for their behavior while engaging in protected activity.

The three setting-specific standards are: (1) the Atlantic Steel test, which governs employee conduct towards management in the workplace; (2) the totality-of-the-circumstances test, which governs social media posts and most cases involving conversations among employees in the workplace; and (3) the Clear Pine Mouldings standard, which governs picket-line conduct. Under the Atlantic Steel test, the Board will look to: (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice. Under the Clear Pine Mouldings test, the Board will consider whether the misconduct was such that, under the circumstances existing, it may reasonably tend to coerce or intimidate employees in the exercise of rights protected under the Act.

LionElastomersLLC&UnitedSteel, Paper&Forestry,Rubber,Mfg., Energy,AlliedIndus.&Serv.Workers Int’lUnion,Local228, 372 NLRB No. 83 (May 1, 2023).

Note:

Going forward, nonprofit organizations should be aware of these setting-specific standards when disciplining employees.