Federal Agency Rules Misclassifying Employees Is Not A Violation

Trucking companies that misclassify drivers as independent contractors are not violating federal law, according to the National Labor Relations Board (NLRB).

Three of the agency's four board members held that an employer's mere communication to its workers that it believes they are independent contractors does not violate the National Labor Relations Act (NLRA) if that opinion is later found to be wrong.

"Such communication does not inherently threaten those employees with termination or other adverse action if they engage in activities protected by the NLRA, nor does it communicate that it would be futile for them to engage in such activities," according to the board, in a ruling issued on August 29.

That determination was made after the board applied a decision it made on a case earlier this year, "SuperShuttle DFW," to a case involving medical express delivery company Velox Express Inc. The board found that Velox Express workers are employees, not independent contractors, so therefore Velox Express violated the NLRA when it fired an employee for complaining about the way workers were being treated. However, the board held that the company misclassifying its employees as independent contractors in and of itself "was not a separate violation."

The ruling is considered by legal experts as the latest in a string of wins this year for employers, including trucking companies, that can avoid significant wage and benefit costs by hiring workers classified as independent contractors versus employees.

"In various jurisdictions, there have been attempts to make misclassification of drivers unlawful in some way," NLRA compliance specialist Jack Finklea, and a partner at the law firm Scopelitis, told FreightWaves.

"Some attempts have been more successful than others, and this new decision provides help to motor carriers combating such attempts. This is a win for trucking company employers because the use of independent contractors is vital to the industry, and this decision forces any plaintiff or driver advocacy group to go beyond merely alleging drivers were misclassified as independent contractors. They will instead be forced to clear the additional hurdle of proving an independent violation of the NLRA."

Finklea added that other cases are currently before the NLRB in which the same claim has been made – that misclassification is itself a violation. "Presumably, those claims will be decided along the lines of the Velox Express case, at least with respect to the misclassification as a violation claim."

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