NLRB's Independent Contractor Standard: Implications for Freelance Stagehands and AV Professionals

On June 13, 2023, the National Labor Relations Board (NLRB) made a significant decision that will have far-reaching implications for workers and employers alike.

The NLRB's ruling in The Atlanta Opera, Inc. (372 NLRB No. 95) redefined the standard used to determine whether a worker is an independent contractor or an employee. This decision, which focuses on common-law factors and diminishes the importance of entrepreneurial characteristics, will particularly impact freelance stagehands and audiovisual professionals. In this article, we will delve into how this decision may affect these workers and what steps employers should take to ensure compliance.

Evolution of the Independent Contractor Standard:

To understand the magnitude of the NLRB's recent decision, it is essential to examine the historical context. Previously, the NLRB relied on the FedEx Home Delivery (2014) ruling, which considered traditional entrepreneurial-driven common-law factors to determine independent contractor status. The emphasis was placed on assessing whether the worker operated an independent business and had genuine entrepreneurial opportunities.

In 2019, the NLRB shifted its criteria in SuperShuttle DFW, Inc., giving greater weight to a worker's entrepreneurial opportunity for gain or loss. However, the recent Atlanta Opera ruling marks another shift away from focusing on a single factor, stating that no one factor should be determinative. Instead, the NLRB will consider a comprehensive analysis of multiple factors to determine classification.

Implications for Freelance Stagehands and Audiovisual Professionals:

Freelance stagehands and audiovisual professionals often operate within the gig economy, relying on project-based work for their livelihoods. The NLRB's decision may have significant ramifications for these workers. By reducing the importance of entrepreneurial characteristics in the classification analysis, the ruling potentially increases the likelihood that such workers will be classified as employees rather than independent contractors.

This reclassification could grant them certain benefits and rights, such as the ability to unionize, receive minimum wage and overtime protections, and access to employee benefits. On the other hand, it may also restrict their flexibility and potentially lead to higher costs for employers who will need to comply with additional labor laws.

What Employers Should Do:

In light of the NLRB's decision, employers who engage freelance stagehands and audiovisual professionals as independent contractors should take proactive measures to ensure compliance with the evolving standards. Here are some key steps to consider:

1. Formalize the Relationship: Establish a formal agreement between the employer and the worker that clearly outlines the nature of the relationship and the expectations of the work to be performed.

2. Evaluate Payment Structures: Move away from hourly payment and consider project-based or day rates. This approach reflects the consideration of the work performed rather than focusing solely on the number of hours worked.

3. Consider the IRS 20 Factor Test: Assess the criteria outlined in the Internal Revenue Service's 20 factor test to determine if critical components for independent contractor classification are met.

4. Avoid Misclassification Risks: Refrain from stretching the definition of independent contractors to avoid adverse findings by the NLRB and potential legal consequences. Other federal and state agencies are also scrutinizing misclassification practices.

5. Be Cautious with "Independent Contractor" Numbers: Large numbers of workers classified as independent contractors may grant them the right to vote in organizing campaigns or even act as "salts" in organizing attacks on employers. Employers should be mindful of this potential liability and take appropriate measures.

The NLRB's decision to change the independent contractor standard has set in motion a new era of classification assessments. Freelance stagehands and audiovisual professionals, who are vital to the entertainment and event industry, may experience significant shifts in their employment status. Employers must adapt to these changes, ensuring compliance with the revised criteria to avoid legal repercussions. By proactively addressing the impact of this decision, employers can maintain productive relationships with their workforce while operating within the bounds of the law.

Legal Notice:

This article shall not be construed as legal advice. Given the complexity of employment laws and the evolving landscape surrounding independent contractor classification, employers should seek guidance from experienced labor and employment counsel. Consulting legal professionals can help navigate compliance issues, mitigate risks, and reduce potential legal exposure.