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Employee Misclassification now an Unfair Labor Practice

Employee Classification now an Unfair Labor Practice

The NLRB just pretty much created a new and potentially powerful Unfair Labor Practice.  This is largely driven through the agenda of General Counsel Richard Griffin who in August instructed regional offices to look for cases where employers had mis-classified employees as independent contractors as he believed this could be an unfair labor practice.  Now that has happened in a case involving a company called Pacific 9 Transportation.

The Labor Relations Today blog has a great article posted about the case, but here’s the bottom line according to them:

What does Pacific 9 portend for employers?  Employers may take small solace in the fact that the General Counsel found Pacific 9’s conduct, apart from the misclassification, particularly egregious.  Pacific 9 continued to tell its drivers they were independent contractors and therefore could not unionize, even after the Region determined otherwise and after arguably acting in immediate contravention of a settlement agreement. Moreover, the case has simply gone to complaint at this point, and the employer continues to defend its position in litigation before the Board, and will perhaps do so before the courts, if necessary.

More broadly, however, Pacific 9 continues the Board’s trend of focusing on broader issues of employment law – specifically including worker misclassification issues.  General Counsel Memorandum 16-01, issued March 22, 2016, identified misclassification of employment status as an issue “of particular interest” to the Board.  Shortly thereafter, on April 18, 2016, the Los Angeles Region issued a complaint against another transportation employer for alleged misclassification of drivers as independent contractors, “depriving them of the protections of the Act.”  Employers must now add “NLRB scrutiny” to the list of risks of employee misclassification (which already include tax liabilities, IRS audits, wage and hour claims and potential class actions).