Our New York Worker Misclassification Attorney Discusses the Recent Yoga Vida Case
Yoga Vida is a yoga studio in New York City and it used two different types of instructors – staff instructors who were treated as employees and non-staff instructors who were treated as independents. As you can guess, the crux of the legal battle in this case was whether the non-staff instructors were correctly classified as contractors or should have been treated as employees. The Company was fortunate enough to have the resources to fight the long battle because the Unemployment Insurance Appeal Board and the Appellate Division both found that the non-staff instructors were misclassified. As a result, the Company was responsible for certain state payroll contributions and could have been responsible for providing employee benefits. The Company filed an appeal to the Court of Appeals.
On October 25, 2016, the Court of Appeals reversed the prior determinations and found that the non-staff instructors were actually independent contractors because, in part, the evidence did not find that the Company exercised control over the results produced and the means used to achieve the results. In short, the Court found that the Company did not exercise sufficient control and direction over the workers. Some of the key factors that the Court found compelling:
- The Non-Staff Instructors made up their own schedules; this fact supports a contractor classification as employees typically have their schedules created and dictated by their employers;
- The Non-Staff Instructors chose their method of payment – either hourly or on a percentage basis.
- Non-Staff Instructors were paid differently than the Staff Instructors. In fact, the Non-Staff Instructors were only paid if a minimum number of students attended so they bear some risk of loss.
- Unlike Staff Instructors, Non-Staff Instructors were not required to sign a non-compete agreement. In fact, the Non-Staff Instructors were allowed to solicit students to attend programs at other yoga studios. This is a critical difference.
- Further, unlike Staff Instructors, Non-Staff Instructors were not required to attend any training sessions or meetings. This is also a critical difference and goes to the heart of the analysis because it undercuts the arguments the workers at issue were directed or controlled.
There is a tread of cases where workers are being found to be misclassified so this is a positive case for Companies. That being said, companies should take care of how they treat their workforce and understand the proper classification at the outset. Here, the Company was smart to treat its employees and contractors differently. Companies should re-examine their workplace practices. A misclassification error can lead to serious consequences and strike at the heart of a company’s business model. Proactive steps can be invaluable.
If you would like to discuss your specific situation or have any questions, contact our Award Winning New York Employment Lawyer for a confidential consultation.
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