Single-route FedEx drivers independent contractors, not statutory employees under NLRA

By Ronald Miller, J.D. — Single-route FedEx drivers who provide package delivery services to residential customers are independent contractors, and are not entitled to the protections of the NLRA, ruled the D.C. Circuit. Because the appeals court had previously ruled that single-route FedEx drivers working out of Wilmington, Massachusetts, were independent contractors, not employees, the NLRB could not rule, on a materially indistinguishable factual record, that single-route FedEx drivers located in Hartford, Connecticut, were statutorily protected employees, not independent contractors (FedEx Home Delivery v. NLRB, March 3, 2017, Millett, P.).

“Common-law agency” principles. The jurisdiction of the NLRB extends only to the relationship between an employer and its “employees;” it does not encompass the relationship between a company and its independent contractors. The determination whether a worker is a statutorily protected “employee” or a statutorily exempt “independent contractor” is governed by “common-law agency” principles. All of the incidents of the relationship must be assessed and weighed with no one factor being decisive. Following the Supreme Court’s ruling in NLRB v.United Insurance, the Board and the D.C. Circuit have generally consulted the Restatement (Second) of Agency for guidance in conducting the common-law agency analysis.

The Restatement (Second) of Agency provides a non-exhaustive list of 10 factors to consider in deciding whether a worker is an independent contractor: “(1) ‘the extent of control’ the employer has over the work; (2) whether the worker ‘is engaged in a distinct occupation or business’; (3) whether the ‘kind of occupation’ is ‘usually done under the direction of the employer or by a specialist without supervision’; (4) the ‘skill required in the particular occupation’; (5) whether the employer or worker ‘supplies the instrumentalities, tools, and the place of work for the person doing the work’; (6) the ‘length of time for which the person is employed’; (7) whether the employer pays ‘by the time or by the job’; (8) whether the worker’s ‘work is a part of the regular business of the employer’; (9) whether the employer and worker ‘believe they are creating’ an employer-employee relationship; and (10) whether the employer ‘is or is not in business.’”

FedEx operates a package-delivery terminal in Hartford, Connecticut. Package delivery drivers operate along certain routes that are designated by the employer. A driver may serve a single route or multiple routes. Both single-route and multi-route drivers operate out of the Hartford location. In 2007, the Hartford single-route drivers elected a union to represent them. FedEx filed objections to the election.

Entrepreneurial opportunity. While that administrative appeal was pending, the D.C. Circuit decided FedEx Home Delivery v. NLRB (FedEx I), holding that single-route FedEx drivers working out of Wilmington, Massachusetts, are independent contractors within the meaning of the NLRA, not employees. FedEx I noted that some of the common-law factors supported employee status, while others were consistent with the drivers being independent contractors. Looking at those factors through the lens of entrepreneurial opportunity, the appeals court concluded that the indicia of independent contractor status “clearly outweighed” the factors that would support employee status.

FedEx subsequently filed a motion with the Board in the Hartford case to dismiss the order against it, principally arguing that FedEx I compelled a ruling in its favor. Nevertheless, the Board certified the union. FedEx refused to bargain, and the Board ruled that it violated the NLRA. FedEx petitioned for review, but before the appeals court could rule, the Board vacated its decision.

NLRB’s new approach. Three years later, the Board issued a revised decision. In that decision, the Board declined to adopt FedEx I’s interpretation of the NLRA. Specifically, the Board disagreed with FedEx I’s treatment of “entrepreneurial opportunity” as an “animating principle” for determining whether a worker is an “employee” or an “independent contractor.” In the Board’s view, entrepreneurial opportunity should merely be one “part of a broader factor that asks whether a putative independent contractor is, in fact, rendering services as part of an independent business.” Applying its newly announced approach, the Board concluded that the single-route FedEx drivers based at the Hartford terminal were “employees” under the Act. FedEx then filed a second petition for review challenging the Board’s decision.

Question answered by FedEx I. In the D.C. Circuit’s view, the question before it had already been asked and answered in FedEx I. The instant case involved the exact same parties, the facts were “virtually identical,” and the Board made no effort to distinguish the two cases factually. The appeal court observed that having chosen not to seek Supreme Court review in FedEx I, the Board could not effectively nullify the court’s decision in FedEx I by asking a second panel to apply the same law to the same material facts but give a different answer.

The appeals court rejected the Board’s contention that this case involved “two fairly conflicting views” of how the law should apply to these facts. Accordingly, the court granted FedEx’s petitions for review, vacated the Board’s order, and denied the Board’s application for enforcement.

Source: Single-route FedEx drivers independent contractors, not statutory employees under NLRA