On August 29, 2019, the National Labor Relations Board (“NLRB”) held that misclassifying an employee as an independent contractor, on its own, does not violate the National Labor Relations Act (the “Act”).
In Velox Express, Inc. and Jeannie Edge, Velox misclassified its employees as independent contractors. When Ms. Edge coordinated group complainants about the misclassification, Velox discharged her. An administrative law judge originally determined that Velox’s misclassification of its workers violated the Act because classifying a worker as an independent contractor is inherently coercive. The ALJ reasoned that classification as an independent contractor conveys a message that the worker cannot exercise Section 7 rights.
The NLRB disagreed, and held that misclassifying an employee as an independent contractor does not violate the Act because there is no implied prohibition on Section 7 activity by communicating classification alone. If after misclassification, however, an employer responds with threats or somehow discourages Section 7 activity, then it has committed an unfair labor practice. That is why the NLRB also held that Velox violated the Act when it discharged Ms. Edge for her complaints.
As the NLRB explained, reasonable minds routinely differ on employee versus independent contractor status. Thus, prior to Velox Express, employers faced great risk of liability under the Act by merely classifying their workforces. Velox Express now offers some additional protection for employers as they decide whether to classify workers as employees or independent contractors. Employers still must take great care in how they classify employees, as the NLRB is just one potential forum where misclassification can be an issue.