Misclassifying an employee as an independent contractor is not itself a violation of federal law, the National Labor Relations Board ruled Thursday in a victory for employers.
With the growth of the “gig economy,” many employers have designated workers as contractors. Contractors typically have fewer protections under the law and can’t form unions.
The NLRB, the main federal labor law enforcement agency, said that, even in cases where employers were wrong to label a worker as an independent contractor, labeling was not itself a violation of the National Labor Relations Act, one of the main laws covering worker rights. In other words, even if an employer wrongly tells a worker that they aren’t protected by the law, that is not a violation. Employers can effectively say “oops” afterwards.
The NLRB said that the board majority decided that the mislabeling “does not inherently threaten those employees with termination or other adverse action” and thus doesn’t constitute a violation of the law.
Most federal laws, such as the NLRA, which covers union organizing, or the Fair Labor Standards Act, which covers things like overtime pay, apply mainly to direct employees. Contractors are technically separate businesses even if they are a single person. Thus contractors typically aren’t covered by federal worker protections. Designating workers as contractors therefore is an increasingly common practice by employers.
The five-member board voted 3-1 on the issue, with all three Republican members forming the majority and lone Democratic member opposing. The board currently has one vacancy. The ruling came in a case called Velox Express, Inc.
