Court Overrules NLRB, Says Workers are Independent Contractors Not Employees of Referral Service

March 24, 2016 /

A referral service that referred stagehands to event producers for concerts, plays, trade shows, and other events offered jobs to employees on a first-come, first-served basis. The referral service, which required employees to sign independent contractor agreements, did not withhold taxes or other benefits, prohibit the stagehands from accepting jobs from other referral services or from doing other work, or provide stagehands with any tools (other than a company vest for safety and identification reasons). The stagehands were required to check in and out with the company in order to keep track of their hours. Nonetheless, when a union petitioned the NLRB to represent the stagehands, the Board concluded they were employees, directed an election, and certified the union.

On appeal, the Eleventh Circuit said the Board made several errors “when it applied the law to the facts.” The errors include:

  1. The Board erred by not giving adequate weight to the facts that the employer did not withhold stagehands’ taxes and that the stagehands signed independent contractor agreements.
  2. The Board’s consideration of the stagehands’ inability to negotiate their pay was irrelevant.
  3. The Board’s conclusion that the stagehands performed the “essential functions” of the company’s operations was erroneous.
  4. Contrary to the Board’s conclusion that the company controlled the workers, “[o]nly the event producers and touring crews control the means of the work performed by the stagehands, and [the employer] lacks the expertise to direct the stagehands in their work for any particular client.”

The Court’s analysis is instructive to other companies faced with the potential union organizing of independent contractors. As the NLRB continues to aggressively expand the reach of the National Labor Relations Act and help unions organize any worker possible, this case provides a decent roadmap to ensure independent contractors remain independent.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.