We all know that the US Department of Labor and the Internal Revenue Service dislike the use of the Independent Contractor classification. Now the National Labor Relations Board has weighed-in as well and, guess what, they don’t like it either.
Improper classification can lead to an unfair labor charge
According to Richard J. Reibstein of the firm Pepper Hamilton LLP the NLRB did not directly say that improperly classifying a worker as an independent contractor was an unfair labor charge (ULP) but they certainly implied it. The case involved more than just having people classified as independent contractors. The employer went beyond that and told the drivers they had classified as ICs that they had no right to be forming a union, and indeed that would have been true is the company had actually treated these workers as independent. Unfortunately they did not, subsequently the NLRB said the company was violating Section 8(a)(1) of the NLRA.
So although the NLRA did not explicitly make having independent contractors an unfair labor practice Reibstein says:
While a close reading of the Advice Memo makes it clear that misclassification itself is not an unfair labor practice, the NLRB seems to have created an unfair labor practice premised on IC misclassification plus something more – even a statement that may be nothing more than a comment protected by Section 8(c) of the NLRA.
Protecting the company
How given how tenuous the independent contractor classification is how does a company protect itself from problems. Reibstein says, and I hardily agree:
“…businesses that utilize independent contractors would be wise to focus on enhancing their compliance with applicable IC laws instead of concerning themselves about an agency that may be expanding its notion of what constitutes an unfair labor practice in the area of IC misclassification.”