The Franchise Memorandum

The National Labor Relations Board has overruled its 2014 decision in FedEx Home Delivery, 361 NLRB No. 610 (2014), finding that FedEx improperly limited the significance of a worker’s “entrepreneurial opportunity for gain or loss” when evaluating whether a party is an independent contractor or an employee. SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019). In SuperShuttle, the NLRB considered whether SuperShuttle franchisees, who operate shared-ride vans to and from the airport, were employees for purposes of the National Labor Relations Act, or whether the franchisees instead qualified as independent contractors and thus were excluded from the Act’s coverage. The NLRB historically has used a variety of common law factors when conducting its employee vs. independent contractor analysis, such as the extent of control exercised by the employer, method of payment, supervision, and other considerations. Pre-FedEx, factors supporting a worker’s entrepreneurial opportunity generally weighed heavily in favor of finding independent contractor status, whereas factors indicating control over the individual weighed in favor of finding employee status. Then, in FedEx, the NLRB refined the test by recasting entrepreneurial opportunity as just “one aspect of a relevant factor.”

Holding that it had improperly refined the test in FedEx, the NLRB returned its analysis to the pre-FedEx common law factors and ruled that the SuperShuttle franchisees were independent contractors. The NLRB reasoned that SuperShuttle franchisees lease or own their vans, pay weekly flat fees to SuperShuttle rather than a percentage of profits, and have nearly complete control over their work schedules and working conditions, all of which provide SuperShuttle franchisees with significant entrepreneurial opportunity for economic gain. While overruling FedEx, the NLRB still noted that entrepreneurial opportunity is not a “super factor” and that the NLRB should evaluate the common law factors through the prism of entrepreneurial opportunity when the facts of the case make such evaluation appropriate.