🗞️ NLRB Judge Rules Michigan Phlebotomy Staffing Company Violated Labor Law with Restrictive Contracts

ALJ Renée D. McKinney issued a decision finding that Mobile Phlebotomy of Central Michigan, LLC (MPCM Services) violated Section 8(a)(1) of the National Labor Relations Act by maintaining unlawful provisions in three employment agreements it required phlebotomists to sign. The case was tried in Bay City, Michigan, on January 15, 2025.

Kayleigh Sobanski, a phlebotomist who worked for MPCM from December 2020 to June 2023, filed charges on November 22, 2023, and amended charges on March 11, 2024. MPCM, owned solely by Amanda Breasbois, contracts with healthcare institutions to provide phlebotomy staffing services.

The Central Question: Employee or Independent Contractor?

A key issue in the case was whether the phlebotomists were employees or independent contractors. MPCM classified the workers as independent contractors, requiring them to pay their own taxes and issuing 1099 forms rather than W-2s.

However, ALJ McKinney conducted an extensive analysis under the Atlanta Opera standard, examining multiple factors under common-law agency principles. She found that despite the contractual designation, the phlebotomists were actually employees.

Factors Supporting Employee Status

Employer Control: The judge found Respondent exercised significant control by:

• Unilaterally setting all terms in mandatory agreements
• Assigning phlebotomists to shifts they couldn't freely change
• Prohibiting discussion of pay and work-related information
• Finding coverage when workers were absent
• Changing pay rates at will to reward or discipline workers

For example, when phlebotomist Jason Hoppe discussed his pay with Sobanski, Breasbois unilaterally cut his $27/hour rate back to $25/hour as punishment, later restoring it only after Hoppe promised not to discuss pay again.

Work Integrated into Business: The phlebotomists performed work that was integral to MPCM's core business. As the judge noted: "Respondent cannot operate without the phlebotomists that it refers to its clients, which, in my view, conclusively establishes that their work is a part of the regular business of the employer."

Supervision: While day-to-day supervision came from the healthcare facilities, MPCM required phlebotomists to report work-related issues to the company rather than clients, provided training through more experienced phlebotomists (paying them extra), and directed performance standards.

Method of Payment: Phlebotomists were paid hourly rather than by the job, with rates varying by shift (third shift paid more than first or second) and day (weekends and holidays paid at higher rates). This unilateral determination of pay method weighed toward employee status.

No Independent Business: The phlebotomists showed no characteristics of operating independent businesses. They had no proprietary interest in their work, no control over hiring or scheduling, didn't purchase equipment, and didn't invest capital.

The Restrictive Agreements

MPCM required all phlebotomists to sign three agreements containing numerous restrictive provisions:

1. Independent Contractor Staffing Agreement

This agreement designated workers as independent contractors and included:

• Pay rates specific to each shift and time period
• Prohibition on discussing "Pay shift levels or the amount earned to anyone"
• 5-year non-disclosure of pay requirement
• Cell phone usage restrictions
• "Termination Contract Fee" for leaving without 2 weeks' notice
• Terms regarding bereavement leave, sick leave, COVID-19 vaccination

2. Non-Disclosure Agreement

This 5-year agreement prohibited disclosure of:

• "Personnel" information (broadly defined)
• Business plans, methods, customer lists, financial information
• The existence of the agreement itself
• Subjected violators to injunctive relief and actual/exemplary damages

3. Non-Compete Agreement

This 5-year agreement prohibited:

• Working for competitors anywhere in Michigan
• Associating with MPCM's "current or former independent contractors, affiliates"
• Sharing technical or non-technical information

Judge's Findings on Contract Violations

ALJ McKinney found several provisions violated Section 8(a)(1):

Pay Discussion Prohibitions (UNLAWFUL): Two provisions in the Independent Contractor Staffing Agreement explicitly restricting discussion of pay for 5 years violated workers' fundamental rights under the Act. "It is foundational under the Act that employees have the right to discuss their wages and terms and conditions of employment both with one another and with third parties."

Personnel Information Confidentiality (UNLAWFUL): The Non-Disclosure Agreement's prohibition on disclosing "personnel" information was overly broad, as was the 5-year prohibition on disclosing the agreement's existence.

Associating with Contractors (UNLAWFUL): The Non-Compete Agreement's prohibition against "associating with" or "engaging with" current or former contractors violated workers' rights to communicate with fellow employees.

Cell Phone Rule (LAWFUL): The judge rejected claims that the cell phone prohibition was unlawful, finding the rule's express reasoning ("our job is to be there to work") made clear it applied only to working time, not breaks.

Confidentiality of Business Information (LAWFUL): The Non-Compete Agreement's confidentiality provisions regarding proprietary business information (customer lists, business plans, etc.) were found lawful because they focused on legitimate business secrets, not employee-related information.

Non-Compete Provisions: The General Counsel withdrew allegations regarding the actual non-compete restrictions after a change in prosecutorial policy.

What the Judge Dismissed

Despite finding the contract violations, ALJ McKinney dismissed several key allegations:

Misclassification Not a Separate Violation

While finding the workers were indeed misclassified as independent contractors, the judge ruled this misclassification was not itself an independent violation of Section 8(a)(1). The violations stemmed from the specific unlawful contract provisions, not the classification itself.

May 2023 Email Untimely

An allegation regarding a May 4, 2023, email from Breasbois forbidding phlebotomists from discussing pay was dismissed as untimely. The charge was filed November 22, 2023—more than six months after the May 4 email, violating Section 10(b) of the Act's statute of limitations.

State Court Lawsuit Not Preempted

On October 13, 2023, MPCM filed a lawsuit in Michigan state court against Covenant Healthcare (a client), Sobanski, and Hoppe, alleging breach of non-compete agreements and tortious interference.

The General Counsel argued this lawsuit was preempted under San Diego Building Trades Council v. Garmon and had an illegal objective. The judge disagreed, finding:

• The lawsuit sought to enforce non-compete provisions, not the unlawful confidentiality or pay discussion restrictions
• Non-compete provisions were not alleged as unlawful in the NLRB case
• No jurisdictional conflict existed since non-competition wasn't at issue before the NLRB
• The lawsuit didn't have an illegal objective under the Act

"I cannot conclude that the state court lawsuit was filed with the intent of retaliating against employees Sobanski and Hoppe," the judge wrote.

No Unlawful Discharge

The complaint alleged MPCM discharged Sobanski on June 29, 2023, for challenging the agreements' legality. The judge found Sobanski resigned rather than being discharged.

The evidence showed:

• Sobanski requested release from the agreements to seek employment elsewhere due to reduced hours at Covenant
• Her attorney's June 22 letter specifically challenged only the non-compete provisions, not confidentiality clauses
• In a June 8 text exchange, Sobanski gave two weeks' notice unless released from the non-compete
• When MPCM didn't provide a full release, the notice period elapsed

Critically, the judge found Sobanski's objection was to the non-compete restrictions (which prevented her from working elsewhere as a phlebotomist), not to the confidentiality provisions found unlawful. This distinguished the case from Long Island Association for Aids Care, where an employee was fired for opposing unlawful confidentiality requirements.

Working Conditions at MPCM

The decision reveals how MPCM operated:

Scheduling: MPCM received requests from healthcare facilities for specific numbers of phlebotomists on certain shifts. Breasbois chose which workers to offer shifts based on their preferences. Sobanski typically worked 80 hours per two-week period on third shift.

Pay Practices: Despite hourly pay, MPCM changed rates unilaterally. Hoppe's experience illustrated this: Breasbois gave him an unsolicited raise from $25 to $27/hour, then cut it back to $25 when she learned he discussed pay with Sobanski, then restored it to $27 after he promised not to discuss pay again.

On-Site Work: At Covenant, phlebotomists wore badges identifying them as contractors, plus MPCM-provided uniforms with the company logo. They worked alongside Covenant's directly-employed phlebotomists using Covenant equipment and supplies. They followed Covenant's dress code, break times, procedures, and work rules, but MPCM also imposed its own rules via email.

Supervision: Day-to-day supervision came from Covenant employees, but MPCM tracked performance, required incident documentation in MPCM-provided notebooks, discouraged direct communication with clients about problems, and passed along performance feedback from facilities.

Training: More experienced MPCM phlebotomists trained new workers, receiving an extra $50/day. New workers also attended a two-day Covenant orientation.

Remedy Ordered

ALJ McKinney ordered MPCM to:

1. Cease and desist from maintaining employment agreements that:

   • Prohibit discussing wages or working conditions
   • Prohibit discussing the agreement's existence
   • Subject employees to legal action for disclosing wage information
   • Prohibit associating with current/former contractors

2. Rescind unlawful provisions by either:

   • Informing employees in writing that unlawful provisions are rescinded, OR
   • Providing inserts with lawfully worded provisions, OR
   • Publishing revised agreements without unlawful provisions

3. Post notices informing employees of their rights for 60 days

The judge did not order any remedies related to Sobanski's separation, back pay, or other individual relief since she found no unlawful discharge occurred.

Legal Significance

This decision illustrates several important principles:

Substance Over Form: Contractual designation as "independent contractor" doesn't determine actual status. Courts examine the economic realities and degree of control.

Breadth Matters: Even legitimate business interests (like protecting confidential information) can't be pursued through overly broad restrictions that sweep in protected employee communications.

Timing is Critical: The 6-month statute of limitations under Section 10(b) strictly applies, barring otherwise valid claims.

State Court Access: Employers can pursue state court remedies for legitimate business disputes (like non-compete enforcement) without automatic NLRB preemption, as long as the lawsuit doesn't target protected concerted activity.

Resignation vs. Discharge: Employees who give notice and leave aren't "discharged" even if they're protesting company policies—unless they're opposing unlawful policies that are actually at issue in the case.

Business Model Implications

The decision has significant implications for staffing agencies using independent contractor models:

• Detailed control over work, even if exercised indirectly through client requirements, supports employee status
• Unilateral control over pay rates and schedules weighs heavily toward employee status
• Providing uniforms, insurance, training, and representing workers as company representatives all support employee status
• The lack of true entrepreneurial opportunity—like ability to work for others, set own rates, or hire assistants—is critical

Case Number: 07-CA-330791
Parties: General Counsel represented by Dynn Nick; Charging Party by Nicholas Feinauer; Respondent by Errick A. Miles

Note: This decision may be appealed to the full National Labor Relations Board. If no exceptions are filed, the findings and Order become final.