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New NLRB Contractor Ruling Good for Tech Startups

By George Khoury, Esq. on January 29, 2019 | Last updated on March 21, 2019

If tech startups have one thing in common, it's the ability to exploit the underemployed for profit. And while lawmakers have been slow to react when some industry is "disrupted," the fight over how to classify the gig-economy workers rages on.

Most recently, the NLRB issued a ruling classifying the workers for SuperShuttle in the Dallas-Fort Worth area as independent contractors rather than employees, and while you might not think of SuperShuttle as belonging to the new wave of tech startups, you might want to think again. Basically, in 2005, before the rideshare giants disrupted the industry, SuperShuttle changed its business model to make its drivers franchisees/independent contractors, rather than standard employees. In short, the rideshare giants of today basically just copied SuperShuttle's model and made an app to replace dispatch.

Entrepreneurial Opportunity

Perhaps the most significant issue discussed in the NLRB SuperShuttle decision involves the "entrepreneurial opportunity" factor of the employee/independent contractor test. The board explained that prior decisions had too severely discounted this factor, that independent contractors can perform other work, or do the work a little differently, or hire others to do the work for them. The board found here that despite SuperShuttle controlling nearly every aspect of their drivers' business, excepting scheduling of work hours, the drivers, because of the "entrepreneurial opportunity" provided, were properly classed as independent contractors.

Notably though, in a dissent, NLRB member McFerran explained that his fellow board members did "not coherently apply the test," and that the majority did more than just reach "the wrong result," it adopted a test that flies in the face of both prior Board and U.S. Supreme Court precedent.

State Law Still Applies

Fortunately for many gig-economy workers, or others stuck in exploitative independent contractor situations, as the scourge of gig-employment providers Shannon Liss-Riordan explained to Ars Technica, state law claims can still be used to reclassify the relationship as an employer/employee relationship.

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