NLRBThe independent-contractor model has been an important catalyst for improving the nation’s economic vitality. Because individuals often provide services for others while maintaining independent control over the means and methods of their own work, the use of independent contractors fosters an entrepreneurial spirit while giving firms that contract with such individuals an increased flexibility that promotes efficiency and innovation.

In recent years, however, federal regulators have increasingly pressured businesses to move away from the use of independent contractors, who are not legally entitled to unionize under federal law. Among federal agencies, the National Labor Relations Board (NLRB) has led this charge. Beginning with the last administration, the NLRB has intensely scrutinized and second-guessed companies’ worker-classification determinations, often deeming independent contractors to be “employees” under the National Labor Relations Act (NLRA). At great expense in time and resources, some companies have successfully appealed from the NLRB’s employment-classification rulings in federal court.

A recent decision by an NLRB administrative law judge (ALJ) against Velox Express, Inc. pushes this agenda even further.  Without citing any legal authority, that decision holds that the bare misclassification of an employee as an independent contractor constitutes a standalone violation of the NLRA.

According to the ALJ’s theory, by simply communicating its independent-contractor-classification decision, Velox was “effectively telling [its drivers] that they are not protected [under the NLRA] and thus could be disciplined or discharged for trying to form, join or assist a union.” Before deciding whether to adopt that unprecedented view, the NLRB has invited amicus briefs to help address the novel legal issues presented. WLF’s brief is available here.

While there are many compelling statutory and policy reasons why attaching liability to a company’s mere misclassification of its agents as independent contractors is a bad idea, one stands out as uniquely important: imposing such liability would undoubtedly abridge employers’ constitutionally protected free speech in violation of § 8(c) of the NLRA.

Congress enacted § 8(c) to “implement the First Amendment” by carefully balancing an employer’s right to speak freely with its employees’ rights to organize.  Under § 8(c), a company’s “express[ion] of any views, argument, or opinion … shall not constitute or be evidence of an unfair labor practice.” 29 U.S.C. § 158(c). That categorically includes a company’s considered legal opinion about whether its workers are independent contractors.

Section 8(c) thus limits the Board’s regulatory authority over speech strictly to only those cases where the company’s speech contains “a threat of reprisal or coercion.” Yet there is nothing remotely “coercive” about identifying a worker, even mistakenly, as an independent contractor. And nothing in the record of the Velox case suggests that the company ever used the requisite threats, force, or promises of benefits necessary to strip the company’s speech of its § 8(c) protections. Under any fair reading of the federal case law applying § 8(c), the NLRB is strictly prohibited from converting purely uncoercive speech into an unfair labor practice.

In NLRB v. Gissel Packing Co., 395 U.S. 575, 617 (1969), the Supreme Court explained that “an employer’s free speech right to communicate his views to his employees is firmly established and cannot be infringed by a union or the Board.” Crown Cork & Seal v. NLRB, 36 F.3d 1130, 1140 (D.C. Cir. 1994)(citing Gissel, 395 U.S. at 617). Since Gissel, the Supreme Court has characterized § 8(c) as an explicit direction from Congress to leave noncoercive speech unregulated. Above all, § 8(c) encourages “freewheeling use of the written and spoken word.” Chamber of Commerce v. Brown, 554 U.S. 60, 68 (2008).

And the NLRB itself has recognized that an employer’s legal opinions—even if later found to be mistaken—are not subject to liability under the NLRA. See, e.g., Children’s Center for Behavioral Dev., 347 N.L.R.B. 35, 36 (2006) (“Although the [employer’s] position has now been rejected, there is nothing unlawful in stating a legal opinion, even if it is later rejected.”).

Because attaching liability to a company’s mere classification of its agents necessarily abridges that company’s core speech rights, the NLRB should overturn the ALJ’s decision in Velox and abandon any attempt to expand the scope of employer liability under the NLRA.

Also published by on WLF’s contributor page.