The decision to classify a worker as an independent contractor, rather than as an employee, carries significant legal implications. Misclassifying employees as independent contractors can result in employer liability for unpaid payroll taxes, unpaid unemployment and workers’ compensation premiums, and responsibility for failure to provide the various rights afforded under employment laws to employees but not to independent contractors. A careful approach, including legal advice, is always wise in evaluating whether a worker can properly be classified as an independent contractor. However, the National Labor Relations Board (NLRB) has taken one element of risk out of the decision.

In a recent case involving a transportation company, the NLRB concluded that the company had misclassified some of its drivers as independent contractors. But, the NLRB also concluded that the misclassification, standing alone, did not constitute a violation of the National Labor Relations Act (NLRA). The case is Velox Express, Inc. 15-CA-184006, 368 NLRB No. 61

The NLRB Administrative Law Judge (ALJ) who initially heard the case had concluded that the fact of misclassification violated the NLRA rules which protect the rights of employees to join unions. Independent contractors, unlike employees, do not have the right to organize. The ALJ felt that by classifying the drivers as independent contractors Velox had inherently interfered with their right to organize. On appeal the NLRB overruled the ALJ’s decision. The NLRB concluded that just the fact of misclassification does not inhibit or otherwise interfere with the rights of employees to organize.

This decision does not mean that employers can let down their guard when making classification decisions. Misclassification can still bring significant legal risk under tax law, employee benefits law, and other laws protecting employee rights. Misclassification can also indirectly lead to problems under the NLRA. In the Velox case the company had terminated one of its drivers after she complained about being misclassified. The NLRB ruled that since the driver was, in fact, an employee, she had the right under the NLRA to complain on behalf of herself and others about what she felt was a misclassification. So, although the misclassification, standing alone, was not an NLRA violation, the adverse action taken against a complaining employee was.