Earlier today, the National Labor Relations Board released its ruling in The Atlanta Opera, Inc. This long-anticipated decision enshrined a broad definition of “employee” that will punish many firms and independent contractors.
Atlanta Opera involved a cohort of makeup artists, wig makers, and hair stylists seeking to unionize, despite not being recognized as full-time employees. The Board held that these workers should qualify as full-time employees, and enjoy the myriad protections afforded to them as such. To reach this conclusion, the Board overturned its own Trump-era ruling in SuperShuttle. SuperShuttle held that independent contractors should primarily be classified according to their opportunity for economic gain or loss. Instead of this approach, the current Board leaned on an archaic “common law” test, which considers many factors as to how an employee may be classified – none of which are more dispositive than another.
The common law test for classifying independent contractors, which does not have a clearly defined hierarchy of factors, creates substantial uncertainty in hiring markets. Failure to comply with employee protections can lead to substantial civil penalties for prospective employers. Accordingly, companies will hesitate to hire independent workers when the possible legal classifications are so broad. Nonetheless, the left continues to promote broader employee classifications as a method for generating additional payroll taxes and increasing union membership.
Landmark will remain outspoken in defending the liberty of independent contractors. These entrepreneurs are engines of the American economy, especially in key sectors such as trucking. Moreover, economic freedom encompasses more than just the right to earn. Independent workers, unlike salaried employees, also enjoy the right to decline work assignments when they so choose.
Last year, Landmark filed a regulatory comment with the Department of Labor to challenge their proposed rule adopting the common law test supported by the NLRB today. As we noted in that comment, over 64.6 million Americans worked as independent contractors in 2022. In a survey conducted by the Coalition for Workforce Innovation, 94% of independent workers reported enjoying their hiring arrangement. Joe Biden’s Department of Labor and his appointees to the NLRB are attempting to use the law to prevent these elective and economically productive arrangements.
Landmark hopes that other economic freedom groups will look for opportunities to join the fight against these excessive impingements on American entrepreneurship.
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