New York State Department of Labor Misclassification of Workers Blog Series
That was the issue in the recent New York Third Department Appellate Division decision In the Matter of TMR Security Consultants Inc., [Commissioner of Labor] Decided December 29, 2016. This is another key case in a new series of decisions beneficial for companies. We have discussed prior DOL decisions in our blog. This is an area that is evolving and the cases are very fact specific. An adverse determination can have significant consequences including a future claim for unpaid overtime pay. If you have any concerns or questions, contact our Award Winning New York Employment Lawyer to understand your rights and options.
On June 9, 2015, the Unemployment Insurance Appeal Board found that TMR Security Consultants had misclassified its security officers as independent contractors instead of employees. As a result, TMR was responsible for not only making unemployment insurance contributions for the claimant but also for all similarly situated workers; not only can that be expensive, it can also raise other collateral legal issues. TMR appealed that decision to the Appellate Division, which reversed and determined that the workers were independent contractors for multiple reasons (e.g., the Company did not direct or control the workers, the workers could work for competitors, the workers were licensed, etc.). Selections from the Court’s decision are included below:
“Whether there exists an employment relationship is a factual issue for resolution by the Board and its decision will not be disturbed when supported by substantial evidence” citations omitted… “Although no single factor is determinative, the relevant inquiry is whether the purported employer exercised control over the results produced or the means used to achieve those results, with control over the latter being the more important factor.”
“The record evidence reveals that TMR posted security-related jobs on a secure website for its clients, who dictated the hours to be worked, as well as the scope of services. To the extent that we have applied the overall control test to determine whether an employer-employee relationship exists in unemployment insurance cases involving individuals providing security services…The security officers, after browsing through these postings, would request to work on any particular job, which TMR ultimately awarded on a “first come, first serve” basis. The security officers were free to select a job that they wanted and were not prohibited from seeking jobs from TMR’s competitors. TMR did not provide the security officers with training or equipment nor did TMR pay the security officers a set hourly rate. Furthermore, once TMR placed the security officer with a client, TMR did not enter into a contract with the security officer. While a security officer could be in the middle of a continuing job for a client, he or she was nonetheless free to leave at any point and work elsewhere. In addition, if an issue arose with the security officer’s performance, the client dealt with the security officer directly, and TMR would be notified if it needed to provide a substitute security officer. Inasmuch as the proof of incidental control relied upon by the Board does not support the conclusion that the security officers were employees.”
One of the key issues is that TMR did not treat these workers like employees in the classic sense. They were not paid hourly, did not have a regular schedule and were not supervised. They were free to work as much or as little as elected. Conversely, employees typically have a set schedule created by their employer. While this is a positive case for companies, this case does not stand for the proposition every security guard will be treated as an independent contractor. The facts will vary from case to case and the determinations are case specific. Do not hesitate to contact our office to understand your specific legal obligations and considerations.
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