Pennsylvania Interscholastic Athletic Assoc. v. NLRB , 926 F.3d 837 ( 2019 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 16, 2018 Decided June 14, 2019
No. 18-1037
PENNSYLVANIA INTERSCHOLASTIC ATHLETIC ASSOCIATION,
INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
OFFICE AND PROFESSIONAL EMPLOYEES INTERNATIONAL
UNION,
INTERVENOR
Consolidated with 18-1043
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Maurice Baskin argued the cause for petitioner. With him
on the briefs was Tony W. Torain.
William E. Quirk was on the brief for amicus curiae
National Federation of State High School Associations in
support of petitioner.
2
Eric Weitz, Attorney, National Labor Relations Board, was
on the brief for respondent. With him on the brief were Peter
B. Robb, General Counsel, John W. Kyle, Deputy General
Counsel, Linda Dreeben, Deputy Associate General Counsel,
and Usha Dheenan, Supervisory Attorney.
Melvin S. Schwarzwald argued the cause for intervenor in
support of respondent. With him on the brief was Timothy
Gallagher.
George N. Davies was on the brief for amicus curiae
Association of Minor League Umpires, OPEIU Guild 332, in
support of respondent.
Before: GARLAND, Chief Judge, and GRIFFITH and
PILLARD, Circuit Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: This case asks whether lacrosse
officials working for the Pennsylvania Interscholastic Athletic
Association (PIAA) are employees subject to the National
Labor Relations Act (NLRA) or independent contractors
exempt from its protections. “[T]here is no shorthand formula
or magic phrase that can be applied to find the answer . . . .”
NLRB v. United Ins. Co. of Am., 390 U.S. 254, 258 (1968).
Rather, we must evaluate all aspects of the relationship using
several factors from the common law of agency as a guide.
Because the weight of the evidence demonstrates that the
officials are independent contractors, we grant PIAA’s petition.
I
3
PIAA develops and administers rules and procedures for
20 sports for more than 1,600 junior high and high schools in
12 geographic districts throughout Pennsylvania. It also selects
officials to referee these sports. Officials must meet certain
criteria to join and, once hired, must comply with certain rules
to remain PIAA officiators.
In 2015, the Office and Professional Employees
International Union (the “Union”) filed a petition with the
National Labor Relations Board (NLRB) seeking to represent
approximately 140 individuals who officiate lacrosse games in
Districts VII and VIII. PIAA contested the Union’s right to
hold an election on three grounds. First, PIAA claimed that it
is a political subdivision of Pennsylvania, not an “employer,”
and is exempt from the NLRA. See 29 U.S.C. §§ 152(2), 158.
Second, PIAA argued that the lacrosse officials are
independent contractors, rather than “employees,” and thus not
protected by the Act. See id. §§ 152(3), 157. Finally, PIAA
contended that even if it is an employer and the officials are
employees, the officials were not eligible for certification as a
bargaining unit because of the sporadic nature of their work.
The Regional NLRB Director rejected PIAA’s arguments
and directed that a Union election take place. PIAA petitioned
the Board for review of the Regional Director’s conclusions
that it is an employer and the officials are employees. While
that petition was pending, the Union conducted its election.
The Board took up only the issue of whether the officials
are employees or independent contractors. PIAA and Office &
Prof’l Emps. Int’l Union, 365 N.L.R.B. No. 107, at 1 n.2 (July
11, 2017); see J.A. 745 (explaining that the Regional Director’s
conclusion that PIAA was not a political subdivision did not
raise “a substantial issue warranting review”). Two members
voted to affirm the Regional Director’s decision that the
4
officials are employees. The third dissented. PIAA, 365
N.L.R.B. No. 107, at 1.
PIAA subsequently refused to bargain with the Union,
which the Board held was a violation of the NLRA. PIAA
petitioned this court for review of the Board’s conclusions, and
the Board cross-applied for enforcement. We have jurisdiction
over PIAA’s petition pursuant to 29 U.S.C. § 160(f), and over
the Board’s cross-application pursuant to § 160(e).
II
Because the lacrosse officials who sought to join the Union
are independent contractors, the NLRA does not apply to them,
and we need not consider whether PIAA is a political
subdivision or an employer.
A
Determining whether a worker is an employee or
independent contractor for purposes of the NLRA is more art
than science. See United Ins., 390 U.S. at 258. As a guide, we
and the Board look to ten factors from § 220(2) of the
Restatement (Second) of Agency, as well as “whether the
workers have a ‘significant entrepreneurial opportunity for
gain or loss.’” Lancaster Symphony Orchestra v. NLRB, 822
F.3d 563, 565-66 (D.C. Cir. 2016) (quoting Corp. Exp.
Delivery Sys. v. NLRB, 292 F.3d 777, 780 (D.C. Cir. 2002)). 1
1
The ten Restatement factors are: (1) the extent of the
employer’s control over the work; (2) whether the worker “is
engaged in a distinct occupation or business”; (3) “the kind of
occupation,” and whether it “is usually done under the direction of
the employer or a specialist without supervision”; (4) the skill
required for the occupation; (5) who “supplies the instrumentalities,
tools, and the place of work”; (6) “the length of time for which the
5
“[N]o one factor” is per se determinative, however, and we
cannot simply count up the factors on each side to declare a
winner. United Ins., 390 U.S. at 258; FedEx Home Delivery v.
NLRB (FedEx I), 563 F.3d 492, 497 n.3 (D.C. Cir. 2009).
Rather, we must “assess[] and weigh[]” “all of the incidents of
the relationship . . . in light of the pertinent common-law
agency principles” to identify the “decisive factors” in each
particular case. United Ins., 390 U.S. at 258.
As this analysis does not involve any “special
administrative expertise that a court does not possess,” id. at
260, we “need not accord the Board’s decision that special
credence which we normally show merely because it represents
the agency’s considered judgment,” Lancaster Symphony
Orchestra, 822 F.3d at 566 (quoting C.C. Eastern, Inc. v.
NLRB, 60 F.3d 855, 858 (D.C. Cir. 1995)). “That said, because
drawing [this] distinction requires an exercise of judgment
about facts, to which we would ordinarily defer, we do not
review the Board’s determination de novo. Instead, we take a
middle course, and will uphold the Board if at least it can be
said to have made a choice between two fairly conflicting
views.” Id. (internal quotation marks, citations, and alterations
omitted). However, we will reverse the Board if “the evidence,
fairly considered, fails to support the conclusion that the
[workers] are employees under traditional agency law
principles.” N. Am. Van Lines, Inc. v. NLRB, 869 F.2d 596, 604
(D.C. Cir. 1989).
person is employed”; (7) “the method of payment, whether by the
time or by the job”; (8) whether the work is part of the employer’s
“regular business”; (9) whether “the parties believe they are creating
the relation of master and servant”; and (10) whether the employer
“is or is not in business.” RESTATEMENT (SECOND) OF AGENCY
§ 220(2) (AM. LAW INST. 1958).
6
B
We reverse the Board because it failed to adequately
account for the strength of the two aspects of this relationship
that most strongly favor independent-contractor status: the few
times on which PIAA actually pays the officials and the short
duration of their employment.
The strongest factor supporting independent-contractor
status is the fact that PIAA itself pays officials for very few
games per year (factor 7); for the other games, officials are paid
by the schools. During the 7-week regular season, officials
typically work 2-3 games per week, though some work as few
as 2 games total. Officials negotiate with and receive their per-
game compensation directly from the schools. PIAA is not
involved in the payment; it merely requires officials to sign
contracts with the schools and stipulates that officials be paid
with checks. In the 4-week postseason, by contrast, PIAA sets
the per-game fee, selects officials, and pays them. See
RESTATEMENT (SECOND) OF AGENCY § 220(2) cmt. j (payment
by the job, rather than by the hour, favors contractor finding).
The postseason includes both intra- and inter-district
championships. The record does not indicate how many games
or days officials work during the intra-district championships,
but officials work at most 4 days during the inter-district
championships. But even assuming that each game occurs on a
separate day and that officials work a similar amount during
the regular season and the intra-district championships, this
amounts to, at most, 8-10 days of postseason work. In fact, the
Association represented without contradiction that it pays the
average official for only 3 games per year, see Tr. of Oral Arg.
at 10:4-8, and officials who do not referee any postseason
7
games never receive payment from PIAA. 2 It simply cannot
be—as the Board thought—that the extent to which PIAA
controls how the officials are compensated by the schools
“outweighs” this other compelling evidence. See PIAA, 365
N.L.R.B. No. 107, at 8-9.
The fact that PIAA lacrosse officials are eligible to earn
money from this position for only 11 weeks per year (factor 6)
also strongly supports independent-contractor status. As we
have explained, the average official works, at most, 22-31 days
per year (14-21 in the regular season and 8-10 in the
postseason). Further, even under a generous estimate, officials
work only 2 hours per game (based on record evidence that
each game lasts about 1 hour, see Tr. of Oral Arg. at 20:19-
21:5, and that officials must “[r]eport for duty at least 30
minutes before the scheduled start of” each game, J.A. 67). At
oral argument, PIAA’s counsel represented without
contradiction that officials work “on average” only 20 hours
per year. Tr. of Oral Arg. at 10:3-4. Whether 20 hours or 60,
this heavily favors independent-contractor status. See
Lancaster Symphony Orchestra, 822 F.3d at 568 (that
musicians worked at most 140-150 hours per year favored
independent-contractor status); Pa. Acad. of the Fine Arts, 343
N.L.R.B. 846, 846-47 (2004) (same, where models worked 1.5-
226 hours per semester).
The Board erroneously discounted this short duration of
the officials’ employment because “PIAA registers officials
2
During the 2014-2015 lacrosse season, 12 of the 42 officiating
spots in the inter-district playoffs went to officials from Districts VII
and VIII. The record does not specify the number of spots available
in the intra-district playoffs and inter-district championship game, or
the breakdown by district. Still, it seems highly unlikely that every
one of the approximately 140 lacrosse officials registered in Districts
VII and VIII refereed a postseason game.
8
annually,” encourages re-registration, and “many officials
work for PIAA for many years.” PIAA, 365 N.L.R.B. No. 107,
at 8. But unlike a worker who is automatically invited back year
after year and, if available, assigned hours, PIAA officials must
satisfy various criteria to re-register and there is no guarantee
that registered officials will be selected to referee any games in
a given year. See In re Lancaster Symphony Orchestra, 357
N.L.R.B. 1761, 1761 (2011).
Three other Restatement factors also suggest that PIAA’s
lacrosse officials are independent contractors, albeit not as
strongly. Officiating lacrosse requires skill and expertise
(factor 4), but not on the same level as a professional musician.
See RESTATEMENT (SECOND) OF AGENCY § 220(2) cmt. h
(work requiring education or skill suggests contractor
relationship); Lancaster Symphony Orchestra, 822 F.3d at 568.
The officials must provide their own equipment (factor 5),
including whistles, pencils, and penalty markers. That suggests
they are independent contractors but only weakly, for the cost
of these supplies pales in comparison to that of a musical
instrument or delivery truck. See Lancaster Symphony
Orchestra, 822 F.3d at 569; C.C. Eastern, 60 F.3d at 858; see
also RESTATEMENT (SECOND) OF AGENCY § 220(2) cmt. k (use
of employer’s tools suggests employee status, “especially if
they are of substantial value”). And although PIAA designates
the location of each postseason game, its member schools own
and operate the fields. See Lancaster Symphony Orchestra, 822
F.3d at 569 (that orchestra supplied the concert hall favored
employee status). As for the parties’ understanding of their
relationship (factor 9), numerous documents state that the
officials are independent contractors, including the PIAA
Constitution and Bylaws, the Officials’ Manual, and the
application to register as an official. Although PIAA
unilaterally created these documents, which somewhat
undercuts their value because the officials could not negotiate
9
the terms, see Local 777, Democratic Union Org. Comm. v.
NLRB, 603 F.2d 862, 878-79 & n.45 (D.C. Cir. 1978), the
officials still agreed to adhere to them. Moreover, the
Association does not deduct withholdings on the very few days
it issues the officials’ paychecks. See Lancaster Symphony
Orchestra, 822 F.3d at 568 (absence of withholding suggests
the parties believe the workers are independent contractors).
This outweighs the fact that PIAA provides the officials with
certain types of insurance, which favors employee status. See
FedEx I, 563 F.3d at 498 n.4.
A few factors suggest the officials are employees, but not
as strongly as those that point towards classifying them as
independent contractors. PIAA, a registered 501(c)(3), is in
business (factor 10), and so is more likely to hire an employee
than a non-market participant. Its aim is to create “a system of
fair play for interscholastic sports,” PIAA Br. 40, which
requires both uniform rules and officials to enforce them,
meaning the nature of its business and the officials’ business is
the same (factor 2). PIAA’s attempt to separate this into two
distinct categories—its “business of setting standards of
fairness for amateur athletic competitions” and the officials’
business of “officiating individual competitions,” PIAA Br.
30—is unavailing. And because PIAA relies on these officials
to carry out its purpose and their work frequently overlaps, the
officials are part of PIAA’s regular business (factor 8). See
Lancaster Symphony Orchestra, 822 F.3d at 568.
That brings us to entrepreneurial opportunity. Because the
officials have some opportunities to work “harder” but none to
work “smarter,” this favors an employee finding. Id. at 569
(quoting Corp. Exp. Delivery Sys., 292 F.3d at 780). The
officials can take on more games in the district in which they
are registered. They can accept other referee positions,
although PIAA has a near-monopoly on junior and high school
10
level lacrosse in Pennsylvania, and there is no evidence in the
record that any official has accepted another lacrosse refereeing
position in Pennsylvania or elsewhere. These chances to work
“harder” signify some opportunity for entrepreneurialism, but
they “provide[] only miniscule support for [independent-
contractor] status.” Id. Far more important is whether officials
have the chance to work “smarter.” They do not. Officials have
no control over the length of the games they referee, see Corp.
Exp. Delivery Sys., 292 F.3d at 780, and they may not hire
assistants, assign games to others, or find cheaper replacements
and pocket the difference, see FedEx I, 563 F.3d at 499-500.
Combined, the evidence demonstrates only “limited
opportunit[y] for entrepreneurial gain,” which favors an
employee finding. Lancaster Symphony Orchestra, 822 F.3d at
570. 3
That leaves us with the question of PIAA’s control and
supervision over the “means and manner” of the officials’
work, and whether such work is usually done in the locality
under an employer’s supervision or by a specialist without
supervision (factors 1 and 3). Id. at 566 (quoting C.C. Eastern,
60 F.3d at 858). In some respects, that control is significant and
points towards employee status: PIAA dictates how to become
3
The Board relied on the test for entrepreneurial opportunity
that it articulated in FedEx Home Delivery, 361 N.L.R.B. 610 (2014).
See PIAA, 365 N.L.R.B. No. 107, at 4, 10-14. After argument, PIAA
submitted a letter pursuant to Rule 28(j) notifying us that in
SuperShuttle DFW, Inc., 367 N.L.R.B. No. 75 (Jan. 25, 2019), the
Board overruled that portion of FedEx and articulated a new
approach for how to treat entrepreneurial opportunity. Despite this
change, we see no need to remand. Whether the Board’s approach
has indeed changed is immaterial because, as SuperShuttle
recognizes, we owe the Board no deference on matters of law,
including the proper formulation of this inquiry. Id. at 13; see FedEx
Home Delivery v. NLRB, 849 F.3d 1123, 1128 (D.C. Cir. 2017).
11
and remain an official, and controls their conduct and the
uniforms they must wear. See id. at 567. PIAA also sets the
rules officials are charged with enforcing using a template from
the National Federation of State High School Associations that
PIAA updates as it sees fit. See Collegiate Basketball Officials
Ass’n v. NLRB (Big East), 836 F.2d 143, 148 (3d Cir. 1987)
(choosing to adopt another body’s rules indicates control). But
telling an official to call a game fairly is hardly akin to
instructing a worker how to work, as the symphony conductor
does when he tells the bassoonist to play a particular note soft
or loud. See Lancaster Symphony Orchestra, 822 F.3d at 566;
Pa. Acad. of the Fine Arts, 343 N.L.R.B. at 847 (that individual
“retain[s] significant discretion” over how to execute
employer’s general guidance favors independent-contractor
status). We recognize that this is somewhat inherent in the
nature of officiating. But PIAA could exercise more control in
the moment by, for example, assigning Association
representatives to review calls made on the field or providing
feedback to officials at the earliest possible moment. It does
neither. See Big East, 836 F.2d at 148 (finding “significant
supervisory control” where officials received feedback “at the
earliest convenient moment, half-time or postgame”).
Moreover, although PIAA reserves the right to suspend or
disqualify officials who violate these various rules, there is no
evidence that it has ever done so. That lessens some of the other
indicia of control. See Lancaster Symphony Orchestra, 822
F.3d at 566 (that organization has and enforces detailed rules
of conduct indicates significant control); United Ins., 390 U.S.
at 258 (same). Apart from evidence about PIAA itself, the
record does not reveal whether similar refereeing in the area
PIAA serves is usually done by supervised employees or
independently. Factors 1 and 3 are thus a mixed bag, but on
balance, they slightly favor employee status.
12
C
This case turns on the strength of the few times on which
PIAA actually pays the officials and the short duration of the
officials’ employment. When these factors are given proper
consideration, the weight of the evidence demonstrates that
these amateur lacrosse officials are independent contractors.
Indeed, “almost every state court decision involving an
amateur sports official’s employment status” has come to the
same conclusion. Marc Sushner, Are Amateur Sports Officials
Employees?, 12 SPORTS LAW. J. 123, 125 (2005); accord
WALTER T. CHAMPION, JR., FUNDAMENTALS OF SPORTS LAW
§ 10:4 (2018) (collecting worker’s compensation cases); see
also Big East, 836 F.2d 143 (holding that certain college
basketball officials are independent contractors). Accordingly,
we reverse the Board and hold that the officials are not subject
to the protections of the NLRA. See 29 U.S.C. §§ 152(3), 157.
We therefore need not decide whether PIAA is an employer or
a political subdivision of Pennsylvania.
III
We grant the petition for review, vacate the Board’s order,
and deny the cross-application for enforcement.
So ordered.