NLRB Makes Quick Work of Worker Misclassification Violation Theory in Velox Express Case

By: Attorney Bryan T. Symes – Weld Riley, S.C.

Late last week, while many were preparing for traditional Labor Day observances, the Republican-controlled Labor Board quietly made quick work of the Obama-Board’s worker misclassification theory of liability [which former General Counsel and Obama appointee, Richard Griffin, enthusiastically advanced during his term].   The Labor Board did so in Velox Express, Inc., 368 NLRB No. 61 (Aug. 29, 2019), available here: [https://www.nlrb.gov/cases-decisions/decisions/board-decisions].

At issue in Velox Express, Inc. was whether the act of worker misclassification [erroneously characterizing employees as independent contractors], in and of itself, constitutes an independent violation of the National Labor Relations Act.    In Velox Express, Inc., the Labor Board first concluded that Velox misclassified certain of its drivers as independent contracts—meaning that these same workers are actually employees protected by the NLRA.    However, more significantly, the Labor Board concluded that the act of worker misclassification, standing alone, does not violate the NLRA—as explained below.  

In Velox Express Inc., the Labor Board rejected the following proposition, adopted by the administrative law judge:

By misclassifying its drivers, Velox restrained and interfered with their ability to engage in protected activity by effectively telling them that they are not protected by Section 7 and thus could be disciplined or discharged for trying to form, join or assist a union or act together with other employees for their benefit and protection.

In rejecting the worker misclassification theory of liability under the NLRA, the Labor Board was “unpersuaded” that the act of misclassification of employees is coercive in nature.  Instead, the Labor Board concluded that misclassification “does not expressly invoke [the NLRA],” because misclassification “…does not prohibit [workers] from engaging in Section 7 activity,” “…does not threaten them with adverse consequences for doing so, or promise them benefits if they refrain from doing so.”    According to the Labor Board:

When an employer decides to classify its workers as independent contractors, it forms a legal opinion regarding the status of those workers, and its communication of that legal opinion to its workers is privileged by Section 8(c)….[the free speech proviso].

The Labor Board also concluded that because “independent-contractor versus employee” determinations are inherently multifaceted and difficult, establishing a stand-alone violation for misclassification would “significantly chill the creation of independent-contractor relationships….”  

The Velox Express, Inc. decision was much anticipated and, as many predicted, removed considerable uncertainty in connection with the worker classification process—a clear victory for the management community.