Whether a worker is entitled to certain benefits or is covered by a particular law depends on the worker’s classification as an employee or independent contractor. Government agencies such as the U.S. Department of Labor, EEOC, IRS and National Labor Relations Board (NLRB) do not all use the same test to determine that classification. In a January 25, 2019 decision, the NLRB changed the test it had been using since 2014.
The 2014 test focused on economic realities such as whether the worker is economically dependent on a company. If the worker was found to be economically dependent, the worker would likely have been found to be an employee rather than an independent contractor.
The NLRB’s new test returns to the “common law” approach that the Board had used before 2014. That approach takes into account a variety of factors, including how much control the company has over the person’s work, and the type of relationship the parties believe they are creating. This new test broadens the standard for who is considered to be an independent contractor and makes it somewhat easier to classify a worker as an independent contractor.
Because not all government agencies have adopted the common law test, employers should be cautious about relying on the NLRB’s approach when attempting to determine a worker’s classification. The particular circumstances of each worker should be considered in determining which factors to apply and which government agency might be involved in examining the classification.
