The composition of a labor organization is not as important as are the purposes for which it is formed and operated.
An organization need not be composed exclusively of employees to be exempt under Internal Revenue Code section 501(c)(5). An organization whose membership includes mostly employees and some independent contractors can qualify if its primary purpose is to better the conditions of its members by negotiating better wages and working conditions with those who contract for its members' services.
Similarly, an organization composed of retired employees can qualify for exemption as a labor organization under Code section 501(c)(5) where it acts to secure and maintain retirement benefits for its members.
However, where most of an organization's members are entrepreneurs or independent contractors, it does not qualify for exemption as a labor organization.