The New York Post used the photojournalistic services of Catherine Nance for approximately five years. When the newspaper no longer needed her services, Ms. Nance filed for unemployment insurance benefits and that’s when a Pandora’s Box was opened for the NY Post. The Department of Labor initially determined that Ms. Nance was eligible for unemployment insurance benefits because she was misclassified as an independent contractor and was, indeed, an employee. The New York Post was found to be liable for unemployment insurance contributions for Ms. Nance and all other similarly situated employees. The Appeal Board agreed with this determination and the New York Post appealed to the courts – Third Department Appellate Division. This blog post generally discusses the reasons why Ms. Nance was determined to be an employee and offers some lessons for companies who use contractors.
Below is the relevant section from the Court’s opinion finding an employee status:
“Following an initial interview and completion of a trial photography session, which was designed “to see if she was good enough to receive assignments” from [NY Post – “NYP”], [Ms. Nance – “Claimant”] consistently received assignments from NYP by telephone or email and worked a “pretty set schedule” of four days each week. According to an NYP representative, these assignments were distributed based upon NYP’s “view of [claimant’s]; suitability for a particular story or picture situation,” and NYP set claimant’s daily rate of pay. Claimant testified that she was given specific instructions for her assignments “most of the time,” which on occasion included “really specific directions about what kind of picture [NYP]; wanted.” Additionally, claimant was required to call in at the beginning and end of her assignments and “couldn’t just go home” if she finished an assignment early. Although claimant admittedly provided her own equipment, NYP specified — in a March 2006 memorandum — the type of camera lens that claimant was required to use, as well as the quantity and selection of photographs that she was to submit. Similarly, while claimant retained the copyright to her photographs, she was precluded from granting rights to those pictures to any newspaper located within a 75-mile radius of New York City without NYP’s prior express approval. Finally, NYP reimbursed claimant for certain of her expenses.”
These facts formed a sufficient basis for the Court to agree that Ms. Nance was an employee. This case offers some cautionary lessons for businesses who use consultants and freelancers. At the outset, it is important to look at the company involved in this case – The New York Post is a large company and it was represented by a large law firm and it was found to have made a classification error. If a large entity like that can make such an error, it is easy to understand why this issue confuses so many small businesses. One key point in the working relationship was the length of Ms. Nance’s working relationship. Contractors are generally engaged for a specific project or finite period while employees are typically hired for an indefinite time. Here, Ms. Nance worked on a continuous basis for approximately five years, which is inconsistent with working on a project basis or a finite period. Second, the newspaper provided significant control and direction over Ms. Nance and her work. She was told what type of lens to do and how to do her job in detail. This is one of the most important factors in the analysis. A contractor typically has a specialized skill and is not subject to control or direction. Finally, it is worth noting that Ms. Nance’s services were integral to the newspaper journalistic mission. In general, if she were a contractor she would have provided ancillary services to the company. There is no mention of an independent contractor agreement in the decision but that could have provided some value to the newspaper. Companies who use contractors should ideally have a signed agreement that details of the nature of the parties’ working relationship and lack of control and supervision.
A company should consult with an experienced employment lawyer before a claim arises to ensure that it has implemented best practices and is prepared to fight back against a misclassification argument in a governmental proceeding or a lawsuit. These types of cases can have class wide implications and materially impact a company’s business model. Strong counsel from the outset is critical.
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