In a major victory for businesses, the NYS Appellate Division ruled that Postmates Inc. did not misclassify couriers as independent contractors. On or about June 21, 2018, the court’s decision, In the Matter of the Claim of Luis A. Vega (Respondent), Postmates Inc., (Appellant) and Commissioner of Labor (Respondent), reversed the Unemployment Insurance Appeal Board’s decision, which had found that Postmates Inc. was liable for unemployment insurance contributions to Mr. Vega and all others similarly situated. Not only would the Unemployment Insurance Appeal Board’s decision have had a significant monetary impact, it would have affected the company’s business model moving forward. The Company would have to change the classification of the delivery couriers moving forward. This could have caused many domino effects. If you have any questions regarding a Department of Labor Audit or proper classification of your workers, contact our office to speak with an employment law attorney for a confidential consultation at (800) 893-9645.
BRIEF PROCEDURAL HISTORY
This case started when a courier, Mr. Vega, filed a claim for unemployment insurance benefits after his contractor relationship with Postmates was terminated due to negative consider feedback and/or fraudulent activity. Postmates runs a web-based platform which enables customers to request pick-up and delivery service from local restaurants or stores. Mr. Vega provided services as a courier to Postmates. Mr. Vega’s unemployment insurance benefit claim initially was denied by an Administrative Law Judge but upon appeal, the Unemployment Insurance Appeal Board determined that an employer-employee relationship existed and deemed Postmates liable for additional unemployment insurance contributions on remuneration paid to Mr. Vega and all those similarly situated. Postmates filed an appeal and prevailed at the Appellate Division.
FACTORS SUPPORTING A FINDING OF A CONTRACTOR RELATIONSHIP
The court stated that “[w]hether an employer-employee relationship exists is a question of fact, to be decided on the basis of evidence from which it can be found that the alleged employer exercises control over the results produced . . . or the means used to achieve the results.” The court further stated that “[i]ncidental control over the results produced — without further evidence of control over the means employed to achieve the results — will not constitute substantial evidence of an employer-employee relationship.” In this case, the court found the following factors supported Postmates was not an employer: (i) it did not interview the couriers; (ii) there was no employment application; (iii) a courier did not report to a supervisor; (iv) the courier unilaterally retained the unfettered discretion as to whether to ever log on to Postmates’ platform and actually work; (v) there was no set work schedule – there was no minimum work time requirement and a courier could work as much or as little (or none at all) as the courier wanted; (vi) a courier could reject or accept a potential assignment without penalty; (vii) a courier could work for other companies including direct competitors; (viii) a courier decided which method of transportation to use to effectuate the delivery – he or she provided for and maintained his or her own transportation and choose the delivery route; (ix) the courier was not required to wear a uniform and was not provided with any company identification; and (x) the courier was not reimbursed for any delivery-related expenses.
While the court did find some facts could support an employment relationship (e.g., setting the rates, tracking the deliveries, handling customer complaints, etc.), it determined those factors failed to show a sufficient indicia of Postmates’ control over the means in which the couriers performed their services. This decision cited the court’s prior decision in Matter of Yoga Vida, NYC, Inc. (Commissioner of Labor), 28 NY3d 1013, 1016 (2016), which we discussed in an earlier blog post.
These types of cases are very fact specific. Not every courier or delivery case will be the same. Proactive steps can be valuable. Learn your rights and steps that you can do to protect your business. If you have any questions about your contractors or employees or an upcoming audit, contact our office.
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