February 15, 2019
Compliance Matters
Recent NLRB Decisions Are Welcome News For Employers

Two recent decisions of the Trump-era NLRB are welcome news for employers. In both cases, the Trump Labor Board reversed a pair of Obama-era decisions that employers found very troubling. The first,
Alstate Maintenance, LLC ( Alstate ) , makes it harder for employees to prove that their behavior was "protected" concerted activity. The second, SuperShuttle DFW, Inc. ( SuperShuttle ) , returns  to a more employer friendly test for when workers can be deemed so-called independent contracts who can't join unions and do not enjoy the protections of the National Labor Relations Act (the "Act").

As previously reported, President Obama's NLRB significantly expanded when employees are engaged in concerted activities protected under the Act ( link ) and curtailed the circumstances when an employer could legitimately claim workers to be immune from union organizing as independent contractors. The new Trump appointees to the NLRB have shown little reluctance to unwinding these and other Obama-era precedents as new cases come before the agency.

"Protected Concerted Activity" Narrowed

The Act establishes the right of employees to act with co-workers in concert to address work-related issues in many different ways (so-called "concerted activity"). Common examples include: talking with one another about their wages and benefits or other working conditions; circulating a petition asking for better hours or wages; participating in a refusal to work in unsafe conditions; engaging in a work stoppage to protest the discipline of a co-worker; openly griping about pay and benefits; making uncomplimentary or unflattering social media comments about management; and many others.  The Act protects this conduct by prohibiting employers from discharging, disciplining, threatening or otherwise taking adverse action against employees who participate is such activities.

In Alstate, the Board significantly narrowed the definition of "protected concerted activity" and, by doing so, effectively circumscribed  the types of employee behaviors that are protected by the Act. The case involved an airport skycap at New York's John F. Kennedy airport who was discharged for openly griping to his supervisor and co-workers about a work assignment and not getting a tip.  A skycap's primary responsibility is to assist airline passengers with their luggage at the terminal entrance, and the bulk of their compensation is typically attributed to passenger tips.  When a van carrying a soccer team arrived at the airport, a group of skycaps first walked away from the work, despite being directly called over by a manager, and one skycap remarked to his supervisor, "We did a similar job a year prior and didn't receive a tip for it."  He and the other skycaps initially refused to help the soccer team with their luggage, but eventually agreed to assist these customers.

The airline terminal manager was distraught by the skycaps' poor service and notified Alstate management.  As a result of the incident, Alstate terminated all four skycaps involved in the matter for being "indifferent to the customer and verbally make [sic] comments about the job stating you get no tip or it is very small tip."

The employees filed Unfair Labor Practice charges with the National Labor Relations Board ("NLRB" or "Labor Board") alleging that their discipline was illegal because the group's refusal to handle the team's luggage and their comments about tips constituted protected concerted activity under the Act.

Applying a more employer-friendly test, the Trump Labor Board determined that the company did not violate the Act by terminating the skycap for his complaint. According to the Labor Board, the gripe was not protected activity for two reasons: (i) because it was not sufficiently "concerted"; and (ii) it was not "for the purpose of . . ." the group's "mutual aid or protection."  In doing so, the Board overruled contrary Obama-era precedent ( Worldmark by Wyndham ) that blurred the distinction between protected and unprotected action, opting to return the Labor Board to a more employer-friendly standard which it articulated some 30 years ago in a pair of cases called Meyers I and Meyers II .

Under the new standard announced by the Trump NLRB, for employee behavior to be protected under the Act, a disciplined employee first must show that the comment, complaint, gripe or other conduct was "concerted," i.e ., that it was engaged in "with or on the authority of other employees, and not solely by and on behalf of the employee himself." Thus, according to the NLRB, an individual employee's workplace concern will only be "concerted" if, based on the totality of the record evidence, it is truly a "group" complaint, as opposed to a personal grievance and there is actual evidence of group activity.  As the Labor Board stated, merely using the plural pronoun, "we", without more, is insufficient to demonstrate the skycap's gripe was truly "concerted" and thus protected under the law.

Second, once an employee's conduct is deemed "concerted", it may still be un protected unless the Labor Board also finds that it is  "for the purpose of . . . mutual aid or protection." To demonstrate the requisite "mutual aid or protection", it must appear (at the very least) that the employee's conduct was engaged in with the "object of initiating or preparing for group action or that it had some relation to group action in the interest of employees." Merely showing that the "skycaps had worked as a group and been 'stiffed' as a group" was not sufficient to demonstrate that mutual aid or protection was the object of the skycap's gripe where the activity was not preceded by group discussion or a group meeting, and there is no evidence that the action at issue was being carried out in furtherance of that group objective.

The Board's new analysis for determining when behavior is "protected concerted activity" is welcome news for employers because employees will have to prove a lot more to claim the protections of Act. However, the decision should not be seen as a free pass for employers. Rather, application of the new test still requires a nuanced and detailed analysis.  Employers must carefully evaluate all of the facts for the requisite "concertedness" of the activity and should be flexible to allow employees to engage in a wide array of behaviors that may at times seem bothersome or even downright insubordinate, but may still be protected.

Independent Contractors

In SuperShuttle, the Board revisited the test for determining when a worker is deemed to be an "employee" entitled to the Act's protections and returned the focus to whether the worker has the requisite entrepreneurial opportunity for economic gain or loss. 

The Act affords protections to employees. Independent contractors are specifically excluded from the Act's protections.  This pivot by the NLRB has significant implications for employers and unions alike since the Act accords organizing rights and its related protections only to those determined to be "employees".  Independent contractors are deemed "employers" in their own right who don't have the statutory rights of employees to form, join or assist a labor union's organizing efforts and are immune from union organizing. The test for determining who is an independent contractor is also of tremendous importance to organized labor, who by law are precluded from organizing independent contractors. For example, the gig-economy offers unions tens of thousands of potential dues paying members if the Labor Board deems these workers to be  "employees" as opposed to independent contractors.

By way of background, in 1968, the United States Supreme Court ruled that the Act incorporated what's known as the common law agency test for independent contractors using a ten factor analysis from a legal resource called the Restatement of Agency.  The test involves weighing a non-exhaustive list of factors focused on the employer's right to control the work, such as: (i) the extent of actual control over the work; (ii) whether (or not) the one employed is engaged in a distinct occupation or business; (iii) whether the work is done under the direction of the employer or by a specialist without supervision; (iv) the skill requirement in the work; (v) the extent to which  the tools, instrumentalities and place of work is supplied by the employer; (vi) the length of employment and how it can be terminated; (vii) the method of payment, and (viii) whether the parties are intending to create a master/servant or independent contractor relationship. 

Over the years, the NLRB and various courts have added that a worker's so-called "entrepreneurial opportunity" in the job is a significant overarching principle in evaluating whether the workers are independent contractors or employees.  However, the Obama Board's 2014 FedEx Home Delivery ( FedEx ) decision diminished the importance of entrepreneurial opportunity in favor of  the employer's "right to control" the individuals and the work. Under the Obama-era formulation, the worker's entrepreneurial opportunity factor took a backseat to these other issues.

In  SuperShuttle, the Labor Board overturned the FedEx formulation of the independent contractor standard and returned to its previous test which emphasizes the importance of workers' "entrepreneurial opportunity" as a guiding principle.  Under this framework, the NLRB evaluates whether the Restatement factors limit or expand the entrepreneurial opportunity of the workers in question and determines their status as independent contractors accordingly. The more entrepreneurial opportunity workers have for profit and loss, the more likely they are to be independent contractors.  When determining whether workers have the requisite entrepreneurial opportunity to be deemed independent contractors, the Labor Board will now emphasize whether the Restatement factors show an opportunity for significant economic gain and/or a significant risk of financial loss.

SuperShuttle involved franchisees who operate shared-ride vans that primarily transport passengers to and from the Dallas-Fort Worth and Love Field airports. The new Trump-era Labor Board held that the franchisees are independent contractors because they do in fact have significant entrepreneurial opportunity.  First, the van operators have a significant risk of loss because they purchased or leased their own vans, paid SuperShuttle an initial fee and a weekly flat fee, and maintain their vehicles at their own cost.  Second, the franchisees have a significant opportunity for economic gain as they have a "nearly unfettered opportunity to meet and exceed their weekly overhead" given that they keep all of their fares, choose when and how much to work with limited restrictions, and have discretion over which trips they choose to accept or reject.  While the Board examined the level of control SuperShuttle has over its franchisees, including setting their rates for fares, mandatory vehicle inspections, requiring SuperShuttle uniforms, and forcing them to accept vouchers and coupons, the Board nevertheless found that these workers were independent contractors based upon its assessment of their entrepreneurial opportunities for economic gain or financial loss as the main determining factor. While the level of control remains a significant consideration, the SuperShuttle decision clearly marks the return of entrepreneurial opportunities (for risk of loss and opportunity for financial gain) as the guiding principal of the analysis.

In SuperShuttle , the Board expressed a clear desire to provide greater clarity to employers and workers who struggled to navigate the blurred lines between employees and independent contractors created by FedEx .  This decision will have significant implications for the ever-expanding "gig-economy."  Based on this decision, businesses like Uber, Lyft, Postmates, and TaskRabbit now have an established framework for successfully fending off union organizing attempts and precluding these workers from enjoying the Act's many protections afforded to employees.   

Importantly, the Board's ruling only affects these workers' rights under the Act. It does not alter a business owner's obligations on any other legal front.  Employers are advised to remain vigilant on the employee vs. independent contractor analysis involving other areas of the law like wage-hour compliance.  A stark reminder is the new California Supreme Court Dynamex decision from mid-2018, which makes it extremely difficult for any business to successfully classify workers as independent contractors for wage-hour compliance purposes (previously detailed here: link ). 

The Trump-era Labor Board remains extremely active.  Business owners are advised to stay on high alert for new case decisions and administrative rulemaking.  A few days following the SuperShuttle decision, the Board announced new NLRB rulemaking to further clarify the independent contract vs. employee classification.  Additionally, the NLRB is in the final stages of issuing rulemaking to revise the Obama Board's hot button joint-employer standards. The SuperShuttle decision should serve as a clear signal that the Trump NLRB is motivated to revisit  any Obama-era standard that afforded workers and unions enhanced protection. We will continue to report on these developments.

If you have any questions regarding the issues discussed in this edition of Compliance Matters, please call your firm contact in California at (818) 508-3700 or in North Carolina at (704) 945-7163, or visit us online at www.brgslaw.com.

Eric W. Mueller
Richard S. Rosenberg
Ballard Rosenberg Golper & Savitt, LLP 

15760 Ventura Blvd.
Eighteenth Floor
Encino, CA 91436
(818) 508-3700

6135 Park Drive South
Suite 510
Charlotte, NC 28210
Matthew Wakefield:
(704) 846-2143 


Like us on Facebook  Follow us on Twitter  View our profile on LinkedIn
Join Our Mailing List