In Time Auto Transportation v NLRB, (2004 WL 1635558, 6th Cir., (7/23/04)), and Weary v Cochran, (2004 WL 1687952, 6th Cir. (7/29/04)), the Sixth Circuit Court of Appeals reviewed two cases involving the determination of whether individuals were independent contractors or employees under the National Labor Relations Act (“NLRA”), and the Age Discrimination in Employment Act (“ADEA”). The Court upheld the National Labor Relations Board's (“Board”) decision finding that the individual long-haul drivers in Time Auto were employees under the jurisdiction of the NLRA. The Court then turned to Weary, finding that the individual in question was an independent contractor under the ADEA.

In Time Auto, grievants Randy Hill and Ernest Blake worked as long-haul truck drivers. Time Auto hired them as “independent contractors” to move freight (automobiles) between the US and Canada. After Hill and Blake solicited other drivers to join a union, Time Auto terminated their independent contractor agreements. Hill and Blake filed an unfair labor practice charge against Time Auto claiming that their terminations were illegal because they were employees who had engaged in concerted protected activity under the NLRA. The parties stipulated that if Hill and Blake were found to be independent contractors, their terminations would be upheld, but if they were employees of Time Auto, then their terminations would be prohibited.

The NLRB has long held that the determination of whether an individual is considered an independent contractor or an employee is not dependent on the title given by the parties, but subject to the “right to control test.” NLRB v United Ins. Company of America, 390 US 254 (1968). Courts and the Board look beyond titles and to the “total factual context of employment” in order to determine whether an individual is an independent contractor or an employee. The "right to control test" requires an analysis of the totality of the working relationship, with no singular factor being decisive to the determination of the status of the worker.

While some aspects of the relationship between the grievants and Time Auto were indicative of an independent contractor relationship, the Board’s decision focused on areas where the company clearly controlled the working conditions of the drivers, which it found to be determinative to the status of Hill and Blake’s employment. Hill and Blake were required to lease their vehicles from the company, and to tender a $10,000 deposit on each vehicle. The Company had the ability to terminate the relationship with the drivers at will, and if it chose to do so, the drivers would forfeit the required deposit. The Company instructed the drivers on certain routes to take and the Board found that the Company, at least implicitly, instructed drivers to disregard federal maximum driving time regulations in order to make their deliveries within the required time frame. Long-haul drivers were prohibited from using the leased trucks to haul any loads other than those assigned by Time Auto, and received their pick-up and delivery instructions exclusively from Time Auto’s dispatch.

Based on these factors, the Board determined and the Sixth Circuit affirmed, that the drivers were in fact employees of Time Auto, and that Time Auto committed an unfair labor practice when they discharged grievants for engaging in concerted protected activity. The Board ordered Time Auto to rehire the grievants and otherwise make them whole.

In Weary, Plaintiff John Weary worked as an Agent of Northwestern Mutual Life Insurance Company from 1973 to 2000, when he was fired for failing to meet minimum selling standards. Weary filed an action under the ADEA, claiming that he was illegally fired based on his age. The District Court determined that Weary was an independent contractor and not an employee of Northwestern, therefore he did not have a claim under the ADEA.

The Sixth Circuit Court analyzed the case under the “common law agency test,” which requires that the court consider the hiring party’s right to control the manner and means by which the product is accomplished, similar to the “right to control test” cited in Time Auto. Among the factors the Court considered were the skill required for the position, the source of the instrumentalities and tools, the location of the work, the duration of the relationship between the parties, the extent of the hiring party's control over when and what hours are required to be worked, and the hired party’s role in hiring and paying assistants.

Based on these factors, the Court determined that Weary was an independent contractor. Many of the skills Weary demonstrated were generic and not learned on the job, he determined his hours of work, hired and paid his own assistants, rented his office, purchased computers and other office equipment, and received little direction from the company. Additionally, Weary was free to sell insurance policies for other companies, and did so.

The above decisions provide some guidance to employers in order to structure employment relationships in a manner which clearly establishes workers as independent contractors. Employers should assess any current workers that they have classified as “independent contractors” and make sure that the workers are, considering the totality of their working relationship, truly independent contractors, or face the possibility of being subject to challenges from workers who claim that they are actually employees of the company.

If you have further questions about this alert you may contact our Labor and Employment Group; Adam S. Forman at (313) 496-7654, email: forman@millercanfield.com. This message is for general information only and should not be used as a basis for specific action without obtaining further legal advice.