Court reverses NLRB, finds independent contractor status

Mike Zinser

On Feb. 3, the U.S. Court of Appeals for the 11^th Circuit reversed the National Labor Relations Board's finding that stagehands are employees. The court ruled that the stagehands are independent contractors, and that the decision of the board was "contrary to law."

The current majority composition of the NLRB has been extremely hostile to independent contractor status. In its recent decisions, the board has given no weight to the "entrepreneurial opportunity" of the independent contractors, and also has focused on disparity of bargaining power between a company and an individual independent contractor. The Court of Appeals totally rejected these concepts.

The written agreements between Crew One Productions, Inc. and the stagehands gave the stagehands the right to provide their services to competitors of Crew One. The board ignored that factor, arguing that it is a "consequence of the part-time nature of stagehand work." The court found this to be irrelevant, noting the fact that the agreement with Crew One did not require the stagehands' full-time services does not diminish the significance of the fact-finding that the stagehands had the right to perform services for competing companies.

The court then stated, "The board committed a more fundamental error by treating bargaining power as evidence that stagehands are employees." Disparity of bargaining power does not create an employer/employee relationship. The court concluded by stating that, under the common law of agency, the board should have given no weight to disparity of bargaining power, with respect to negotiations about contract compensation.

The board had found that the stagehands perform work that is essential to Crew One's operations. The court said the relevant inquiry is "whether or not the work is a part of the regular business of the employer." Crew One is in the business of referring stagehands to event producers. However, Crew One does not perform stagehand work itself – only the stagehands do. This is supportive of independent contractor status.

The court relied upon the following additional factors to find independent contractor status:

• Crew One did not have the right to control the manner, means, and details of the work; the court stated that control is the most important factor in the common law.
• Crew One did not withhold taxes from the contract payments; the board erred by not giving strong weight to this factual finding. The stagehands completed IRS Form W-9, which the IRS explains is "the first step when a company has made the determination that the person it is paying is an independent contractor."
• The written agreements evidenced an intention to create an independent contractor relationship; the court noted that, contrary to the argument of the board, the significance of the agreements is not undercut by the fact that all of the stagehands signed one.
• The stagehands provided their own basic supplies they needed for the job.
• The stagehands received no employee-like benefits; Crew One did not provide the stagehands with an employee handbook.
• The stagehands received a brief orientation and a packet of information, but no training.
• The stagehands were not required to participate in any group meetings.

The court found that the only factor that weighed in favor of employee status is that the stagehands were paid hourly. However, the court said that this factor is outweighed by the totality of the other factors, "especially the lack of control."

(Crew One Productions, Inc. v. NLRB)

L. Michael Zinser is the founding partner of The Zinser Law Firm in Nashville, Tenn. The firm, which has a heavy concentration of clients in communications media, represents management in the area of labor and employment. Zinser can be reached at (615) 244-9700 or mzinser@zinserlaw.com.