Employee or Independent Contractor?

Is the New Postmates Decision in New York a Blockbuster Case on Independent Contractor Misclassification or Not?

From JDSupraRichard Reibstein discusses the New York Court of Appeals decision upholding the Appellate Division’s decision that a courier was misclassified as an independent contractor for unemployment purposes. Richard reviewed the history of the case.

  1. Labor Commissioner said the courier was misclassified and was an employee
  2. Administrative law judge reversed saying courier was an independent contractor
  3. Unemployment Insurance Appeal Board reversed saying courier was an employee
  4. Appellate Division reversed saying courier was an independent contractor
  5. Court of Appeals reversed saying the Unemployment Insurance Appeal Board did not make a mistake saying the courier was an employee

Richard writes:

The Majority Opinion in Postmates

The Court of Appeals majority did not find that the courier was an employee; rather, it ruled only that there was “substantial evidence in the record to support the [Appeal] Board’s determination.”

The history of the case is a classic example of administrative and judicial ping-pong.  The Court of Appeals majority reversed the Appellate Division (Third Department), which had reversed a decision by the New York Unemployment Insurance Appeal Board, which had reversed a decision by an Administrative Law Judge, who had reversed a 2015 decision by the Labor Commissioner finding that a courier was misclassified as an independent contractor instead of an employee for unemployment insurance purposes.

A constant refrain by New York appellate courts reviewing administrative decisions by the Unemployment Appeal Board is that even if they may have reached a different decision on the merits based on all of the evidence introduced at the hearing before an ALJ, their limited role is not to decide the merits.  Rather, the role of appellate courts is simply to determine if there was enough evidence in the record to support the Appeal Board’s decision, even if the countervailing evidence was greater. As a result, appellate courts in unemployment cases typically focus on the factors that might have supported the Appeal Board’s decision – and that is what the Court of Appeals did here in its decision.

What were those factors that the majority found to support the Appeal Board’s decision?  The Court pointed to three key factors:

  • The workers were “low-paid” and unskilled.
  • The couriers had limited discretion over how to do their jobs.
  • The “nature of the work” (making deliveries) resulted in Postmates “dominat[ing] significant aspects of its couriers’ work” by dictating to which customers the couriers can deliver and where to deliver the requested items, “effectively limiting the time frame for delivery and controlling all aspects of pricing and payment.”

In 2016, the Court of Appeals issued a widely heralded decision in a case called Yoga Vida, concluding that the Appeal Board’s decision that yoga instructors were employees and not independent contractors was not supported by sufficient evidence.  The majority opinion in Postmates distinguished the instructors in Yoga Vida from the couriers here, pointing out that:  the yoga instructor in that case provided a service that is, “in some respects, unique to that instructor and his or her personal characteristics,” is free to create his or her own customer following and invite students to attend their classes at competing studios, and was afforded the opportunity to chose the manner in which Yoga Vida would calculate the instructor’s pay (either hourly or on a percentage basis). The majority summed up this comparison by noting the obvious: “yoga instructors are not couriers.”

Takeaways

The New York Attorney General called the decision “a huge victory for thousands of gig workers across New York.”  She added: “The courts have solidified what we all have known for a while — delivery drivers are employees and are entitled to the same unemployment benefits other employees can obtain.”  The “victory,” though, has no application to any other gig workers in the state.  It is not determinative of the status of independent contractors engaged by other companies.  It is also limited to the independent contractor status under the unemployment insurance law and does not apply to any other laws in New York, such as workers’ compensation or wage and hour laws.

There are even arguments, besides those pointed out by the dissent, that the decision will have no binding effect on other couriers providing services to Postmates.

As the majority of the Court acknowledged, its decision was not on the merits but rather on the issue of whether there was enough evidence on the record to support the Appeal Board’s conclusion.

The majority opinion is by no means a victory for couriers like the claimant, Mr. Vega, who would not have been eligible for unemployment benefits in any event.  He only worked intermittently for a week when Postmates blocked his access to its app after he repeatedly failed to deliver all of the products ordered by customers.  Further, when couriers like Mr. Vega have their access to a company’s app suspended or terminated by a company like Postmates, the couriers can usually gain immediate work opportunities with other competing companies, thereby eliminating their eligibility for unemployment benefits.

It appears that the majority sought to convey its view that low-paid and unskilled workers are less compatible with independent contractor status under the New York unemployment insurance law than those who earn receive higher fees for their services or are retained because of a skill they possess.  Plainly, higher levels of skill and compensation have always been factors that are taken into consideration in cases alleging independent contractor misclassification; that is hardly an earth-shattering pronouncement by the Court’s majority.

Read the full story at Is the New Postmates Decision in New York a Blockbuster Case on Independent Contractor Misclassification or Not? | Locke Lord LLP – JDSupra

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