Crew One Productions, Inc. v. National Labor Relations Board

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-10429
________________________
Agency No. 10-CA-138169
CREW ONE PRODUCTIONS, INC.,
Petitioner
Cross-Respondent,
versus
NATIONAL LABOR RELATIONS BOARD,
Respondent
Cross-Petitioner.
________________________
Petitions for Review and Enforcement of a Decision of the
National Labor Relations Board
_______________________
(February 3, 2016)
Before WILSON, WILLIAM PRYOR, and GILMAN,* Circuit Judges.
WILLIAM PRYOR, Circuit Judge:
* Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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This petition for review and the cross-application for enforcement require us
to decide whether the National Labor Relations Board misapplied the law of
agency when it determined that local freelance stagehands were employees of a
referral service. That service, Crew One Productions, refers stagehands to the
producers of concerts and other live events in the Atlanta area. The Board decided
that the stagehands were employees of Crew One, which gave the Board authority
to regulate their relationship. The Board later directed an election and certified a
union, and when Crew One refused to negotiate with the union, the Board entered
summary judgment against Crew One for an unfair labor practice. The facts about
the status of the stagehands are essentially undisputed, so we review only whether
the Board correctly applied the law. Because we conclude that the stagehands are
independent contractors, we grant the petition for review, deny the cross-
application for enforcement, and vacate the decision of the Board.
I. BACKGROUND
Crew One refers stagehands to event producers for concerts, plays,
graduations, sporting events, trade shows, and religious events in the Atlanta area.
Event producers ordinarily contract with Crew One for a certain number of
stagehands and pay the company an hourly rate for each stagehand. Crew One then
refers interested stagehands from its database.
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To be included in the database, stagehands complete a questionnaire about
their skills and availability. After submitting the questionnaire, most of the
stagehands attend a brief orientation at the Crew One office, where they receive a
packet of information but no training or testing. The information includes client
policies and best practices, as well as the procedure for accepting or declining
work offered by Crew One.
Much of the orientation is about safety. Crew One requires that stagehands
purchase and wear a hard hat and work boots, and it recommends that they wear
work gloves. The only item that Crew One provides is a reflective vest marked
“Crew One,” as requested by clients for safety (because of the reflective color) and
security (because it identifies the stagehands as authorized personnel). Otherwise,
stagehands may wear “comfortable clothing,” as long as it is “presentable.”
Crew One communicates four other client policies in its orientation packet.
First, stagehands must be sober. Second, stagehands may not interact with the
artists or bring family and friends to events. Third, stagehands should bring a six-
inch crescent wrench, which is “a necessary tool for this type of work.” Fourth,
“[a]nytime a concert load-in is offered, . . . clients expect [stagehands] to also
return for their load-out.”
Additionally, Crew One provides some basic tips about “[d]ealing with
[t]ouring [p]ersonnel.” It warns stagehands that touring crews “sometimes are not
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in the best of moods” and encourages stagehands to wait for and follow
instructions, “ask questions when necessary,” and remember that tour personnel
“are your boss for the day.” The orientation packet also provides driving directions
to venues and the opportunity to purchase a discounted parking pass from certain
venues.
Crew One maintains a workers’ compensation insurance policy at the
request of its clients. The company informs stagehands that they should report
work injuries promptly. It also informs them that the clients pay for the policy.
At orientation, stagehands must sign an “Independent Contractor
Agreement” before Crew One adds them to the database. The agreement informs
the stagehand that he or she is “an independent contractor” who is “responsible for
all . . . [t]axes,” “hired on an individual project basis,” and entitled to “negotiate[]
for each individual project.” Stagehands must also answer additional questions for
the database and complete a Form W-9, which the Internal Revenue Service
explains is “the first step” when a company has “made the determination that the
person [it is] paying is an independent contractor,” see Forms and Associated
Taxes for Independent Contractors, IRS, https://www.irs.gov/Businesses/Small-
Businesses-&-Self-Employed/Forms-and-Associated-Taxes-for-Independent-
Contractors (last updated Jan. 5, 2016) (all Internet materials as visited February 2,
2016, and available in Clerk of Court’s case file).
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When Crew One contracts with a producer to refer stagehands for an event,
it emails the stagehands to offer the work on a first come, first served basis.
Stagehands are free to accept or decline the offer without repercussions. The email
with the offer contains information from the client, forwarded by Crew One,
explaining when and where to report. On the day of the event, stagehands report
thirty minutes before the client’s call time so that a Crew One project coordinator
can confirm attendance for payment purposes and assign them to a particular
department, such as rigging or carpentry. The stagehands bring their own basic
supplies, and Crew One provides no supplies other than the vests. After work
begins, stagehands report exclusively to tour personnel, except that stagehands
must sign out with Crew One to record their time of departure.
Crew One does not require its stagehands to undergo a physical exam or
testing, nor does Crew One subject them to discipline. The company does not
maintain an employee handbook, pay for or provide certifications of proficiency,
conduct any meetings after orientation, or reimburse the stagehands for incidental
expenses. Crew One also does not withhold taxes or offer benefits to the
stagehands, although it does so for administrative employees at its offices. It does
not prohibit stagehands from using other referral services or doing outside work,
and many stagehands do. In fact, the company has directed payments to separate
business entities for at least fourteen stagehands.
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Crew One pays its stagehands based on hours worked, unless the stagehand
negotiates a day rate. All stagehands receive an industry-standard minimum of four
hours of pay per job. Hourly rates vary for certain events, times of day, holidays,
and lengths of time without a break.
In March 2014, the International Alliance of Theatrical Stage Employees
petitioned the National Labor Relations Board to become the representative of
stagehands contracting with Crew One. Based on briefs and the evidence collected
at a hearing, the regional director decided that the stagehands are employees and
that the Alliance did not have a disabling conflict of interest. The director directed
an election to certify the union as the representative of the stagehands.
The Board denied review of the regional director’s decision by a vote of two
to one because Crew One “raise[d] no substantial issues warranting review.”
Member Miscimarra dissented on the ground that the stagehands are not
employees:
[T]he Regional Director determined certain factors favor independent
contractor status; regarding certain other factors, the role of Crew One
appears to be extremely limited given that most if not all performed
work is directed and controlled by third party client(s); and . . . the
Board should determine what weight, if any, shall be afforded to
written agreements stating that stagehands would work as independent
contractors. Even though such agreements are not necessarily
dispositive, it appears that they were afforded no weight in this case
. . . .
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The majority responded that “the Regional Director did evaluate the significance of
independent contractor agreements signed by the stagehands. He simply found that
their potential significance was undercut by the fact that they apparently were
mandated by [Crew One].” “Because direct judicial review of representation
determinations is unavailable,” Crew One could not petition for review in court.
See NLRB v. Ky. River Cmty. Care, Inc., 532 U.S. 706, 709, 121 S. Ct. 1861, 1865
(2001).
After the election, the Board certified the Alliance as the exclusive
representative of the stagehands. Crew One refused to bargain, and the Board filed
a complaint alleging an unfair labor practice, 29 U.S.C. §§ 160, 158. The Board
entered summary judgment against Crew One with no further reasoning about the
status of the stagehands. Member Miscimarra renewed his disagreement with the
earlier denial of review but did not dissent from the summary judgment. Crew One
petitioned for review, and the Board cross-applied for enforcement.
II. STANDARD OF REVIEW
We may enforce the decision of the Board only on the grounds articulated in
its order. Northport Health Servs., Inc. v. NLRB, 961 F.2d 1547, 1553 (11th Cir.
1992). “Because the Board’s summary judgment order is predicated on the
findings in the underlying representation case, we review the merits of those
decisions together on appeal.” Lakeland Health Care Assocs., LLC v. NLRB, 696
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F.3d 1332, 1335 (11th Cir. 2012). “[T]he findings of the Board with respect to
questions of fact” are conclusive “if supported by substantial evidence on the
record considered as a whole.” 29 U.S.C. § 160(e), (f). But “[t]he Board’s
determination that the [stagehands] are employees as opposed to independent
contractors . . . ‘depends on the application of law to facts, and the legal standard
to be applied is ultimately for the courts to decide and enforce.’” NLRB v.
Associated Diamond Cabs, Inc., 702 F.2d 912, 919 (11th Cir. 1983) (quoting
Allied Chem. & Alkali Workers v. Pittsburgh Glass Co., 404 U.S. 157, 182, 92
S. Ct. 383, 399 (1971)).
III. DISCUSSION
The National Labor Relations Act defines “employee” to “include any
employee . . . [but not] any individual having the status of an independent
contractor,” 29 U.S.C. § 152(3), and “the Board has no authority whatsoever over
independent contractors,” FedEx Home Delivery v. NLRB, 563 F.3d 492, 496 (D.C.
Cir. 2009). It is well settled that the common law of agency governs status
determinations. NLRB v. United Ins. Co. of Am., 390 U.S. 254, 256, 88 S. Ct. 988,
990 (1968); Associated Diamond Cabs, 702 F.2d at 918. The Restatement
(Second) of Agency lists the following several factors as relevant to this inquiry:
(a) the extent of control which, by the agreement, the master may
exercise over the details of the work;
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(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.
Restatement (Second) of Agency § 220(2). Among those factors, we give special
attention to control. Associated Diamond Cabs, 702 F.2d at 919.
We divide our discussion in three parts. We begin by discussing the five
errors that the Board made when it applied the law to the facts: first, Crew One
does not have the right to exercise control over the stagehands; second, the failure
to withhold taxes weighs strongly in favor of a determination that the stagehands
are independent contractors; third, the independent contractor agreements are
evidence of the parties’ intent; fourth, negotiations over pay are irrelevant; and
fifth, the stagehands do not perform work that is part of the business of Crew One.
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We next discuss the factors that the Board applied correctly. Finally, we weigh all
of the factors and conclude that the stagehands are independent contractors.
Because we must vacate the decision on this ground, we do not reach Crew One’s
argument that the Alliance had a conflict of interest.
A. Crew One Has No Control Over the Stagehands.
Control is the most important factor in the common law. Id. The test for
control “takes into account the degree of supervision, the entrepreneurial interests
of the agent and any other relevant factors.” Id. at 919–20. It also distinguishes
between “control over the manner and means of the agent’s performance and the
details of the work,” which is relevant, and “mere economic control or control over
the end result of the performance,” which is not. Id. at 920. Under this test, Crew
One did not have the right to control the stagehands.
The regional director made several factual findings about the stagehands’
control over their work, but they fail to establish that Crew One had the right to
control the manner, means, and details of the work. The requirement that
stagehands check in and check out evinces control over the ends of the job, not the
means of it. Crew One uses the requirement to ensure that the stagehands are
present and to calculate their pay. Beyond this control over the ends, any control of
the stagehands’ work is exercised by the clients. Only the event producers and
touring crews control the means of the work performed by the stagehands, and
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Crew One lacks the expertise to direct the stagehands in their work for any
particular client.
The stagehands also have entrepreneurial interests. The regional director
found that the stagehands “are free to accept or reject offered work without
retaliation and are free to accept work from other labor providers.” The Board
argues that this fact is “a consequence of the part-time nature of stagehand work,”
but nothing in the nature of part-time work dictates that Crew One must allow the
stagehands to decline jobs or use competing referral services. That some part-time
workers are employees and that there are other ways for stagehands to have
entrepreneurial interests does not diminish the significance of the regional
director’s factual finding. We conclude that Crew One lacked control over the
stagehands.
B. The Failure to Withhold Taxes Is Strong Evidence That the Stagehands
Are Independent Contractors.
The Board also erred in its application of the law by not giving strong
weight to the factual finding that Crew One does not withhold taxes. In Associated
Diamond Cabs, we explained that “the fact that the Company deducts no Social
Security or income taxes from the [worker’s] receipts . . . is a strong indication of
the absence of employee status.” 702 F.2d at 924 n.3. We acknowledge that our
sister circuits would give this fact less weight. See, e.g., Seattle Opera v. NLRB,
292 F.3d 757, 764 n.8 (D.C. Cir. 2002) (“[T]he tax treatment of the [workers’]
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payments is of little analytical significance . . . .”); Eisenberg v. Advance
Relocation & Storage, Inc., 237 F.3d 111, 116 (2d Cir. 2000) (“Were . . . tax
treatment factors accorded extra weight, . . . a firm and its workers could all but
agree for themselves, simply by adjusting the structure of workers’ compensation
packages, whether the workers will be regarded as independent contractors or
employees.”); J. Huizinga Cartage Co. v. NLRB, 941 F.2d 616, 620 (7th Cir. 1991)
(“[I]f an employer could confer independent contractor status through the absence
of payroll deductions there would be few employees falling under the protection of
the Act.”). The regional director in the present case found that “[t]axes are not
withheld from [stagehands’] paychecks,” but he concluded that this fact was “not
. . . determinative.” Based on our circuit’s precedent, both he and the Board should
have given it strong weight.
C. The Independent Contractor Agreements Are Evidence of Intent to Form
an Independent Contractor Relationship.
The regional director discounted the significance of the independent
contractor agreement signed by each stagehand “because it is required in order to
work for [Crew One].” The Board agreed that the “potential significance was
undercut by the fact that they apparently were mandated by the Employer,” but
Member Miscimarra dissented because he “believe[d] the Board should determine
what weight” should be given to the agreements. We agree with Crew One that the
Board erred.
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One of the Restatement factors is the intent of the parties, see Restatement
(Second) of Agency § 220(2)(i), and an agreement that designates the worker as an
independent contractor is evidence of intent to create such a relationship. We
observed the significance of independent contractor agreements as evidence of
intent in Associated Diamond Cabs, 702 F.2d at 924, and two of our sister circuits
have likewise treated them as “an important indication,” Brown v. NLRB, 462 F.2d
699, 703 (9th Cir. 1972), and “indicative,” C.C. Eastern, Inc. v. NLRB, 60 F.3d
855, 858 (D.C. Cir. 1995), of status as an independent contractor.
If the Board had found fraud, duress, or some other defense to formation, it
would have been correct to disregard the agreements. But the Board made no such
finding. It gave the agreements less weight only because Crew One insisted that all
of the stagehands sign one. This theory is not a valid defense to the formation of
the agreements. Contrary to the argument of the Board, the significance of the
agreements is not “undercut” by the fact that all of the stagehands signed one
The Board cites three decisions to argue that the totality of the circumstances
outweighs the significance of the agreements, but all three decisions are
distinguishable. In each case, the employer exercised control over the manner and
means of performance, which is the most important factor. See City Cab Co. of
Orlando v. NLRB, 628 F.2d 261, 265 (D.C. Cir. 1980) (upholding “the Board’s
conclusion that the company maintained sufficient control over the conduct of its
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drivers”); Time Auto Transp., Inc., 338 NLRB 626, 626 n.1 (2002) (concluding
that the employer “used th[e] right [to terminate the contract] to control the manner
of [the employee’s] performance of his work”); Corporate Express Delivery Sys.,
332 NLRB 1522, 1527 (2000) (concluding that the employer exercised “substantial
control” over the employees). In contrast, the Board made no findings in this case
about “control over the manner and means of the agent’s performance and the
details of the work.” Associated Diamond Cabs, 702 F.2d at 920.
D. The Board Erroneously Considered Negotiations Over Pay.
The Board also gave weight to the factual finding that the stagehands could
not negotiate their pay. Although we have serious doubts that this finding is
supported by substantial evidence in the record, see Hearing Tr. at 62–63, 132,
205, 224–27, 382–83, the Board committed a more fundamental error by treating
bargaining power as evidence that the stagehands are employees. “That the
Company sets the standardized [contract] terms and in some instances unilaterally
changes them, even if true, is indicative only of relative bargaining power, not an
employee-employer relationship.” Associated Diamond Cabs, 702 F.2d at 921.
“[T]he question is not whether the . . . company has economic power; rather it is
whether the company has used its power to establish contract terms controlling the
manner and means in which the [workers] go about their . . . business.” Local 777,
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Democratic Union Org. Comm. v. NLRB, 603 F.2d 862, 870 n.22 (D.C. Cir. 1978);
accord NLRB v. A. Duie Pyle, Inc., 606 F.2d 379, 386 (3d Cir. 1979).
The Board cites three of its own decisions, but none persuade us that
negotiations over pay are relevant. See Time Auto Transp., 338 NLRB 626; Slay
Transp. Co., 331 NLRB 1292 (2000); Roadway Package Sys., Inc., 326 NLRB 842
(1998). The orders in all three cases rely solely on the say-so of the Board, which
does not convince—let alone bind—us as a court applying the common law of
agency. Only one of the decisions was reviewed by a court, and the court never
mentioned negotiations. See Time Auto Transp., Inc. v. NLRB, 377 F.3d 496 (6th
Cir. 2004). Under the common law of agency, the Board should not have weighed
the factual finding on negotiations about pay.
E. The Board Confused Work That Is Essential to Crew One’s Business with
Work That Is Part of Crew One’s Business.
The Board misapplied the law when it considered whether the stagehands
“perform essential functions of [Crew One’s] operations.” The relevant inquiry is
“whether or not the work is a part of the regular business of the employer,”
Restatement (Second) of Agency § 220(2)(h), not whether the work is essential to
the business of Crew One. That the stagehands perform essential work “proves
nothing in regard to the inquiry before us as it is also true in many relationships
which are undisputedly that of a company to independent contractors.” Associated
Diamond Cabs, 702 F.2d at 924. Crew One is in the business of referring
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stagehands to event producers, but Crew One does not perform stagehand work
itself. Only the stagehands do. The undisputed facts about the work of the
stagehands and the business of Crew One support a determination that the
stagehands are independent contractors.
F. The Board Correctly Applied the Law to Its Other Findings of Fact.
The Board made three findings of fact that it correctly concluded weigh in
favor of a determination that the stagehands are independent contractors. First, the
stagehands “provide their own basic supplies on the jobs.” Under the Restatement,
this arrangement is characteristic of an independent contractor relationship.
Restatement (Second) of Agency § 220(2)(e). Second, the stagehands “receive no
benefits.” The lack of employee benefits is evidence of the intent of the parties to
form an independent contractor relationship. See FedEx Home Delivery, 563 F.3d
at 498 n.4. Third, workers’ compensation insurance “is provided at the behest of
clients and the associated costs are charged to the client,” not Crew One. This fact
is also evidence that the parties intend to form an independent contractor
relationship.
The Board made one other finding of fact that supports a determination of
employee status. The stagehands were paid by the hour, and the Board is correct
that this arrangement is a recognized consideration in the law of agency. See id.
§ 220(2)(g).
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G. The Stagehands Are Independent Contractors.
When we consider all of the factors, we must conclude that the stagehands
are independent contractors. The most important factor, control, supports only this
conclusion. The failure to withhold taxes, the independent contractor agreements,
the nature of Crew One’s business, the absence of benefits, the tools, and the
insurance provided by the clients also support only this conclusion. The only factor
that weighs in favor of the opposite result is the hourly payments, but this factor is
outweighed by the totality of the other factors, especially the lack of control. Based
on the factual findings of the Board, the stagehands are independent contractors
and the decision of the Board was contrary to law.
IV. CONCLUSION
We GRANT the petition for review, DENY the cross-application for
enforcement, and VACATE the decision of the Board.
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