Recent activity by the National Labor Relations Board (“NLRB” or “Board”) indicates a growing intent to closely examine employers who classify their workers as independent contractors. This newfound scrutiny signifies a definite shift in the labor landscape, one that could carry heavy implications for companies with significant contractor roles.
In June 2023, the NLRB amended the test it applies to establish whether a worker is an independent contractor or an employee under the National Labor Relations Act (“NLRA”). Notably, these changes have made it increasingly difficult for a worker to be classified as an independent contractor.
Under the revised NLRA regulations, several key elements come into play during the classification process. These include the extent of control an employer has over the worker’s tasks, whether or not the worker operates an independent business, the permanency of the relationship between the worker and the employer, and the investment in facilities and equipment.
The shift in policy under the NLRB can potentially affect a significant segment of today’s workforce who are considered independent contractors. Businesses and corporations employing significant numbers of independent contractors should be mindful of these changes and may need to reassess their worker classifications. Companies will need to closely evaluate their workforce and potentially reconsider how they structure their relationships with their workers.
While the full impact of the 2023 NLRB changes is yet to be seen, it’s clear that this policy change could ripple across various sectors in the global economy. It underscores the need for businesses to stay updated with labor law revisions and the importance of understanding their legal obligations to avoid potential liabilities.