It is a standard industry practice to use independent contractors. However, determining exactly when a worker is considered an employee and not an independent contractor has always been a topic of debate between contractors and lawmakers. There are cases where misclassification has been used to avoid paying worker benefits such as health insurance and workers' compensation. Several states, including California, have tried to tackle the independent contractor issue. Now a federal organization, the National Labor Relations Board, has also weighed in on the debate, with an employer-friendly decision, Construction Dive reports.
On Aug. 29, as part of its consideration of a case involving Velox Express Inc. alleging the violation of labor laws in the transportation industry, the National Labor Relations Board determined that the misclassification of employees as independent contractors does not violate the National Labor Relations Act. NLRA was enacted in 1935 in order to protect employer and employee rights, including the right of workers to organize and engage in collective bargaining. The government also uses the act to prevent private employers from harming workers through harmful labor and management practices.
“On a scale of one to 10, this is about a one or a two,” D. Albert Brannen, partner at the law firm of Fisher Phillips in Atlanta, said. “It is good in that it demonstrates a more reasonable approach by the labor board. It’s more employer-friendly. It’s more practical. It is good that [if you make] a mistake you’re not going to be cited, but under the NLRA … there are no punitive damages. The remedy is you post a notice for 60 days [stating], ‘Employees have these rights, and we won’t violate them.’”
Employers, he said, still need to be able to prove their independent contractors are truly independent or else reclassify them as employees. The ruling is not “a get out of jail card” and won’t provide relief for those who, for instance, use misclassification as a way to get around their obligation to withhold taxes or violate the act in other ways.Read More