In Velox Express, Inc., 368 NLRB No. 61 (2019), the National Labor Relations Board ruled that misclassifying an employee as an independent contractor, standing alone, does not constitute a violation of the National Labor Relations Act.
The NLRA protects the rights of “employees,” which it generally defines as individuals performing work for employers engaged in interstate commerce. It does not, however, cover independent contractors, supervisors, managers, and certain other workers.
In Velox, an employee argued that misclassification of workers as contractors, not employees, per se violated Section 8(a)(1) of the NLRA. That section makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed [by the NLRA].” The employee contended that misclassification “inherently coerces employees in the exercise of their [NLRA-protected] rights and does so regardless of the employer’s intent.”
The Board agreed that an illegal motive was not necessary to find a violation of the NLRA. It disagreed, however, that misclassifying an employee as an independent contractor, without more, constituted a violation. The Board decided that “[a]n employer’s mere communication to its workers that they are classified as independent contractors does not expressly invoke the [NLRA].” It reasoned that such a communication does not prohibit employees from engaging in protected concerted activities, nor does it promise any benefit to individuals who refrain from exercising their NLRA rights.
The Board added that an employer’s decision to classify a worker as an independent contractor represents a legal view of the person’s status. The NLRA protects the expression of “any views, argument, or opinion, . . . if such expression contains no threat of reprisal or force or promise of benefit,” it declared. The Board thus concluded that the NLRA protects an employer’s expression of its classification of an employee, even if its opinion later is proven wrong.
The Velox decision gives employers comfort in knowing that misclassifying employees as independent contractors will not necessarily establish NLRA liability. Independent contractor issues are heavily litigated and are at the forefront of public policy battles. For example, California recently passed Assembly Bill 5, which further cemented the shifting landscape for employers in that state. As such, there are myriad reasons for employers to review the manner in which their workers are classified in order to avoid potential issues.