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NLRB Doubles Down on Misclassification Liability: Misclassification May Also Violate NLRA

In a recent decision by the National Labor Relations Board (NLRB), employers who misclassify independent contractors (ICs) may not only be violating the Fair Labor Standards Act (FLSA), but may also be violating the National Labor Relations Act (NLRA).

In that case, the NLRB ruled the employer had misclassified its employees as ICs. The employer then continued to classify the employees as ICs despite the Board’s ruling. In response, the NLRB Office of General Counsel recommended that a regional NLRB office file a complaint against the employer alleging it violated the NLRA by prohibiting its employees from exercising their Section 7 rights. Section 7 of the NLRA guarantees employees the right to join a labor union and collectively bargain.

The General Counsel called the employer’s failure to classify its ICs as employees a “preemptive strike” to discourage its employees from striking, thus violating their rights. The General Counsel’s comments read, “The Employer’s misclassification suppresses future Section 7 activity by imparting to its employees that they do not possess Section 7 rights in the first place.”

It is important to note that the NLRB did not conclude that the employer’s intent in misclassifying its workers was to keep employees from unionizing. The General Counsel’s recommendation came solely from the fact that the employer had continued to misclassify its workers. However, the General Counsel continued to push for the specific NLRA violation.

ICs and Clubs

It is critical that clubs properly classify their ICs and employees. As this case has shown, clubs may be fighting a classification battle simultaneously on two fronts. This ruling, as well as the Department of Labor’s new IC/EE Classification Guidance, makes it more difficult for a club to correctly classify ICs, and increases a club’s liability and potential penalties for misclassification.

In addition to the NLRB, we are now seeing evidence that action is being taken against clubs that misclassify their employees as ICs and fail to comply with the FLSA. Last week a caddie filed a federal lawsuit against a New York club for not properly classifying him as an employee under the FLSA. Though the case has just begun, it is clear that the issue should be at the forefront for clubs with caddies and other ICs. NCA will keep you informed of this case’s developments.

NCA strongly urges all members currently using independent contractors to discuss the new DOL guidance with their club counsel. In addition, club leaders should review their worker classifications and make appropriate changes where necessary.

New NCA/WGA Survey on Caddies and ICs

In an effort to determine how the DOL’s IC/EE Classification Guidance might impact club workers as well as to gauge the IC climate at clubs, NCA and the Western Golf Association conducted a survey of our members that have caddie programs. To read the article, please click here. It is also featured in the upcoming issue of Club Director.

Below are a few key findings from the survey:

  • 92% of surveyed clubs said they classify their caddies as ICs.
  • Nearly 60 percent of responding clubs said they have between 20 and 60 caddies on their rosters. The most common response was between 20- 39 caddies, with 34 percent of clubs reporting that range. However almost one-third (31%) of those surveyed said they have 60 or more caddies on their rosters, and nearly one in 10 clubs reported having 120 or more caddies.

If you have any questions regarding independent contractor classification, please contact NCA’s VP of Government Relations & General Counsel Brad Steele at [email protected].

Phillip Mike is NCA’s senior communications manager.