In two long awaited decisions, the National Labor Relations Board attempted to clarify who is an "employee" and who is an "independent contractor" under the National Labor Relations Act ("NLRA"). This question is important because under the NLRA employees are protected when they attempt to organize into unions, but independent contractors are not.

In Dial-A-Mattress Operating Corp., and Roadway Package System, Inc., the Board held that it lacked authority to depart from the traditional test of independent contractor status. It found that no increased weight should be given to any particular factor, rejecting interpretations from previous decisions that appeared to give particular emphasis to the "right to control" factor.

In Roadway, the Board found the disputed individuals to be employees. The Board noted that the drivers in dispute do not operate independent businesses; perform functions that are the essential of one company's operations; had no training or experience when hired, but received training from the company; do business in the company's name with assistance and guidance from it; do not ordinarily engage in outside business; are under the substantial control of the alleged employer; have no proprietary interest beyond the investment in their trucks; and, have no significant opportunity for entrepreneurial gain or loss.

In acknowledging the equal importance of all factors, the Board reduced the significance of the most important factor, the "right to control" test, relied upon in numerous recent decisions. These new cases, taken together, show that entrepreneurial risk and integration into the main operation of the employer are significant factors in the employee/independent contractor determination. As the Board attempts to apply this reasoning to situations as they arise, additional fact patterns will emerge.

In Dial-A-Mattress, the Board found the drivers to be independent contractors. The NLRB found significant differences between the operations of Roadway and Dial. Dial created a relationship with the owner-operators with few external controls which allowed the drivers to make a profit beyond a return on labor and capital investment. Thus, many of the drivers had filed applications with the state for permission to transport Dial's mattresses. The very nature of the work (delivery) was ancillary to Dial's main business of selling beds. In general, Dial's drivers: engaged in additional outside business; had complete responsibility for their vehicles; determined their own income level through their own decisions; owned more than one truck and negotiated delivery rates with Dial; and hired at least one or more helpers to perform the delivery service. .

If you have any questions regarding this case or any other issues surrounding independent contractor status, please feel free to contact us by telephone or e-mail below.

The information provided herein is for general guidance on matters of interest only. While every effort has been made to ensure the information provided herein is accurate and timely, no decision should be made or action taken on the basis of this information without first consulting an Epstein Becker & Green professional.

Elliot Mandel
Epstein Becker & Green
250 Park Avenue
New York
10177-0077
USA
Tel: 212 351 4500
Fax: 212 661 0989
E mail:  Click Contact Link 
Please visit our website at  Click Contact Link