NLRB Rules Will Create Confusion in the Final Mile Delivery Space
The National Labor and Relations Board has released two Notices of Proposed Rulemaking for public comment. The “Standard for Determining Joint-Employer Status” and the “Employee or Independent Contractor Classification under the Fair Labor Standards Act” will cause detrimental changes to the identification of independent contractors and third-party administrators.
Any business or independent contractor wishing to express concerns about either of the NLRB Proposed Rules should do so at the Federal Register website (regulations.gov) under the associated Proposal.
“Standard for Determining Joint-Employer Status”
The Board seeks to vastly expand the joint-employer standard, creating a Rule that will change the foundation of many business relationships. The Proposed Rule would rescind and replace the 2020 Rule and make any evidence of control within a business relationship indicative of joint-employer status.
The Proposed Rule adopts an “inclusive” and “non-exhaustive” list of terms and conditions for employment, providing no guidance as to how any factor will be applied to determine “meaningful collective bargaining.” For the first time, “reserved control” and “indirect control” would be considered essential factors. The overly expansive and undefined reach of the Proposed Rule will now make many third-party administrators liable for joint-employer classification.
All comments must be submitted by December 7, 2022, at https://www.regulations.gov/document/NLRB-2022-0001-0001
“Employee or Independent Contractor Classification Under the Fair Labor Standards Act”
The Board proposes a new independent contractor test. The rescinded 2021 independent contractor rule provided a clear multi-factor test for determining an employer-employee relationship. The 2021 Rule identified two core factors – control over work and opportunity for profit or loss – to be determinative, holding more weight than the other probative factors. The new rule is not as straightforward.
The Proposed Rule restores the “totality of the circumstances” analysis of the economic reality test. This creates a problematic “non-exhaustive” list of factors to determine independent contractor status, meaning that any undefined factor could be used to classify an individual as an employee. This new rule will threaten the status of millions of independent contractors.
All comments must be submitted by December 13, 2022, at https://www.regulations.gov/document/WHD-2022-0003-0001
Both proposed rules substitute clearly defined standards for overly broad factors that provide no guidance to current independent contractors, brokers, and TPAs in the Final-Mile delivery space. These Rules will result in immense uncertainty in business relationships, ultimately bringing harm to the business sector and to the economy.