Labor regulators issued a ruling Tuesday that makes it more likely that workers will be treated as employees rather than contractors under federal law.
Overturning a decision made when the board was under Republican control, decision it effectively increases the number of workers—such as drivers, construction workers, or janitors—who have a federally protected right to unionize or take other collective action, such as protesting unsafe working conditions.
The decision ensures that “workers seeking to organize or exercise their rights under the National Labor Relations Act will not be unduly excluded from its protections,” Lauren McFerran, the Democratic chairwoman of the labor board, which voted 3 to 1 along party lines to extension of the standard.
Determining whether a worker is an employee or a contractor has long depended on several variables, including the potential employer’s control over the work and the provision of tools and equipment.
In 2019, when the board was under the control of President Donald J. Trump’s appointees, it elevated one consideration — the chance for workers to make more money based on their business savvy, often referred to as “entrepreneurial opportunity” — above others. He concluded that such opportunities should be the key tie-breaker when some factors indicated contractor status and others indicated employment.
In its 2019 decision, the board said the ruling during the Obama administration inappropriately subordinated the issue of money-making opportunities.
This 2019 decision appeared to be a victory for gig companies like Uber and Lyft, whose supporters they argued that ride-sharing drivers should be considered suppliers in part because of the opportunities they have for potential profit—say, by determining which neighborhoods to work in.
The latest decision returned the board to the standard set in the Obama era, expressly rejecting the elevation of business opportunities over other factors.
The turnaround on Tuesday was criticized by businesses that rely heavily on suppliers. In a statementEvan Armstrong, chairman of the Workforce Innovation Coalition, which represents companies like Uber and Lyft, as well as industry trade groups, said the decision “reduces clarity and threatens a flexible independent model that benefits workers, consumers, entrepreneurs, businesses and the overall economy.”
But some labor experts say it’s not clear that gig companies like Uber and Lyft, which set the prices passengers pay, provide drivers with enough bona fide business opportunities to qualify as contractors even under the old standard.
Marvin E. Kaplan, the board’s lone Republican member, made a version of that argument in his dissent, concluding that the workers in the case before the board—hairdressers, hair and makeup stylists who work with the Atlanta Opera—“have little opportunities for economic gain or, conversely, the risk of loss.”
As a result, he agreed with the majority of the board that stylists should be considered employees with the right to unionize.
But Mr. Kaplan wrote that the lack of business opportunities meant stylists should be considered employees even by the Trump-era standard, and that there was no need to change that.