In July, the National Labor Relations Board announced its long-anticipated decision in The Atlanta Opera Inc.which deals with how workers are classified. The decision is the latest in a long string of worker classification dramas playing out across the United States. Each has the potential to shake up dramatically how an employee is defined, with potentially profound consequences for millions of American workers who serve as independent contractors.

At issue in the Atlanta Opera case was whether stylists — hair styles, make-up artists and wig artists — should be considered opera employees or independent contractors. The NLRB determined that these stylists should be regarded as employees of the opera, making them eligible for certain employee protections, such as the right to unionize. The opera had previously considered these workers to be independent contractors.

In reaching its decision, the NLRB modified the independent contractor standard under the National Labor Relations Act. Until the Atlanta Operadecision, the NLRB operated under the earlier, more business-friendly, independent contractor standard established in SuperShuttle DFW Inc.  in 2019.

That standard had generally classified people who operated their businesses as independent contractors, granting them significantly more freedom to pursue their own working arrangements. Specifically, the standard held that entrepreneurial opportunity should be the “principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.” In other words, the freedom of an entrepreneur to establish a successful business should take precedence over other considerations.

The Atlanta Opera framework rejects this reasoning and embraces a much older independent contracting standard articulated in the 2014 FedEx Home Delivery (FedEx II) decision. That standard significantly narrowed the definition of an “independent contractor” under the NLRA. It argued that entrepreneurial opportunity was one among many factors that must be considered when determining worker status. The Atlanta Opera standard reinstates this multi-factor, common law agency test, with the practical effect being that more workers will be classified as employees.

Read the full Inside Sources article here.

Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.