Like me, I am sure some of you have attended an over-the-top concert and thought “Who puts up these stages and all of these lights?” More importantly, who are the poor souls that are relegated to taking all of this stuff down after the concert is over (which must feel like that never ending drive back to reality after a vacation at the beach)? Have you ever been to a concert and thought, “Hey, are these stagehands employees or independent contractors?” Yeah, me neither. However, that was the precise question before the Eleventh Circuit Court of Appeals in the case of Crew One Productions, Inc. v. National Labor Relations Board, Case No. 15-10429. I’ll save you the suspense, the Eleventh Circuit found that the stagehands are independent contractors, not employees.
From a legal perspective, whether an individual is an employee or independent contractor is important for numerous reasons, including whether such individual is protected by the National Labor Relations Act (the “Act”). The definition of “employee” under the Act specifically excludes independent contractors, and the National Labor Relations Board (the “NLRB”) has no authority whatsoever over independent contractors.
This dispute began in March 2014 when the International Alliance of Theatrical Stage Employees (the “Union”) petitioned the NLRB to become the representative of the stagehands connected with Crew One. The NLRB later directed an election and certified the Union. When Crew One refused to negotiate with the Union, the NLRB entered a finding that the stagehands were employees and that Crew One had committed an unfair labor practice in failing to deal with the Union. Crew One thereafter appealed to the Eleventh Circuit arguing that the stagehands were independent contractors, thus the Act did not apply and the NLRB had no authority over their relationship.
While the opinion gives great detail into the circumstances surrounding the relationship between Crew One and the stagehands, the salient facts can be gleaned from the Court’s ultimate findings. At the outset, the Court reaffirmed that the common law of agency governs employment status determinations. Citing to the Restatement (Second) of Agency, the Court listed the relevant factors to consider:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
A. Crew One Has No Control Over the Stagehands.
After noting that control is the most important factor under the common law test, the Court found that Crew One did not have the right to control the manner, means, and details of the stagehands’ work. It is true that the stagehands had to check in with the Crew One supervisor at the beginning and at the end of the event, but that was solely for the purpose of calculating their hours worked and pay for the day. The actual work performed by the stagehands was controlled by the event producers or the touring crews associated with the event.
B. Failure to Withhold Taxes is Strong Evidence of Independent Contractor Status.
Crew One did not withhold taxes from its payments to the stagehands. While noting that other circuit courts (District of Columbia, Second, and Seventh Circuits) might give this fact less weight, the Eleventh Circuit precedent dictated that not withholding taxes from the worker’s paycheck is strong evidence of the lack of employee status.
C. Independent Contractor Agreements Are Evidence of Intent.
The stagehands were required to execute a “Independent Contractor Agreement” with Crew One confirming that, in fact, they were independent contractors. The Eleventh Circuit found that such agreements, absent fraud, duress, or some other defense to formation, is strong evidence of the parties’ intent to create an independent contractor relationship. The Court also noted that the fact that Crew One required each stagehand to sign such an agreement is “not a valid defense to the formation of the agreements.”
D. The NLRB Erroneously Considered Negotiations Over Pay.
In the proceedings below, the NLRB made a factual finding that the stagehands could not negotiate their rate of pay with Crew One. In the NLRB’s view, this fact supported a finding that the stagehands were employees. On appeal, the NLRB cited to three of its past decision to buttress this proposition. While the Court had “serious doubts” about whether such finding was supported by the record, it found that the NLRB committed a more fundamental error in treating bargaining power as evidence of employee status. Under the common law, negotiations (or lack thereof) over pay is not a factor to be weighed in determining whether an individual is an employee or independent contractor. As for those three prior NLRB decisions, the Eleventh Circuit stated that the “say-so of the Board” is not convincing, nor binding, upon a court applying the common law.
E. Crew One Was Not in the Stagehand Business.
Crew One is in the business of referring stagehands to event producers. It does not itself perform stagehand work. Simple as that. Therefore, stagehand work was not the “regular business” of Crew One and weighed in favor of a finding of independent contractor status.
F. Other Factors Weighing In Favor of Independent Contractor Status.
The Court noted that the NLRB actually got it right on three factors. First, the stagehands supplied their own basic supplies on the job. Second, the stagehands received no benefits from Crew One. Third, workers’ compensation insurance was provided by Crew One at the behest of Crew One’s clients and the associated costs were charged to the clients. All three of those factors weighed in favor of the stagehands being independent contractors.
The Court did note that the stagehands were paid by the hour and such fact did weigh in favor of employee status, that alone would not carry the day. Based upon the analysis provided above, the Eleventh Circuit found that the stagehands were independent contractors, not employees.
Score one for employers on this one.