NLRB: “Entrepreneurial Opportunity” Important to Independent Contractor Analysis

The National Labor Relations Board recently reaffirmed “entrepreneurial opportunity” as an important factor in weighing independent contractor status.

Traditionally, the Board considered all of the relevant common law agency factors, including whether the parties believed they were creating a master-servant relationship, the extent of the company’s control over the details of the work, the extent of supervision by the company, and who supplied the “instrumentalities” (equipment, tools, and supplies) for doing the work.

However, in 2014, the Board, under President Obama, adopted an “economic realities” analysis that overemphasized the company’s “right to control” the work. The Trump Board in SuperShuttle recently returned to the traditional common law analysis. As the Trump Board explained, this does not mean that right to control is not relevant:

Indeed, employer control and entrepreneurial opportunity are opposite sides of the same coin: in general, the more control, the less scope for entrepreneurial initiative, and vice versa. Moreover, we do not hold that the Board must mechanically apply the entrepreneurial opportunity principle to each common-law factor in every case. Instead, the Board may evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate.

In concluding that the SuperShuttle van drivers were not employees, the Board took into consideration, among other things, that the drivers leased or owned their work vans, that they were “entitled to the money they earned for completing the assignments that they select,” and that they had nearly unfettered control over their daily work schedules and working conditions. Thus, the Board found, the drivers had significant entrepreneurial opportunity for economic gain and were therefore independent contractors.

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.