This decision is apparently pre-COVID so what will be the future of the "gig economy" is anyone's guess. Only the dissent is being presented here.
MATTER OF VEGA (POSTMATES INC.—COMMISSIONER OF LABOR), 2020 NY Slip Op 2094 - NY: Court of Appeals March 26, 2020:
WILSON, J. (dissenting):
NOTE:Judge Wilson dissents and votes to affirm in an opinion
in which Judge Garcia concurs.
The majority's opinion suffers from two independent defects. The
first is a failure to examine the record to determine whether the
findings of the Commissioner of Labor were supported by substantial
evidence. Many of those findings were so lacking in support as to appear
to have been cut and pasted from the decision in some other matter, or
from a form list of all the possible factors that might warrant the
conclusion that someone was an employee. Under those circumstances,
reversal is required. The second is a failure to recognize that the
realities of the contemporary working world have outpaced our
jurisprudence. The multitude of factors identified in our caselaw as
pertinent to determining whether a claimant is an employee or
independent contractor — reflective of a time when employees received a
gold watch upon retiring from the sole company at which they spent their
entire careers — coupled with our deferential standard of review, has
left only two undesirable paths open: either we adhere to the caselaw
and standard of review, leaving all agency decisions unreviewable, or we
make haphazard reversals without explanation, based on an
ad hoc
test we do not articulate because it defies explanation. We have chosen
the latter approach, which has nothing to recommend it except that it
is marginally better than the former.
I.
The majority begins by asserting that "[t]he issue before us is
whether the decision of the Unemployment Insurance Appeals Board (the
Board) that claimant, a former Postmates, Inc. courier, and others
similarly-situated are employees for whom Postmates is required to make
contributions to the unemployment insurance fund was supported by
substantial evidence" (majority op at 1-2). That is not correct.
At the inception of the hearing before the ALJ, the following colloquy occurred:
ALJ PICHARDO: This two-page document is marked as an exhibit for the
record as Hearing Exhibit 1 as of today's date. And so where on this
document does it say similarly situated, Ms. Claxton?
MS. CLAXTON [Counsel for the Commissioner]: I don't see it. I don't see it, you're right.
ALJ PICHARDO: So then it's only for —
MS. CLAXTON: For the claimant.
ALJ PICHARDO: — claimant?
MS. CLAXTON: Yes, Judge.
ALJ PICHARDO: All right.
After the close of evidence, the ALJ reiterated that "my decision in
this case ... only relates to Mr. Vega and not any other employees."
Thus, this appeal concerns only Mr. Vega: whether there is substantial
evidence supporting the determination that he was an employee of
Postmates. The Board's determination, erroneously purporting to apply
its decision to all similarly situated Postmates workers, is itself a
freestanding basis to reject the Board's determination (
see Pell v Board of Education, 34 NY2d 222, 230-231 [1974] [the action of an administrative tribunal is arbitrary when "taken without regard to the facts"]).
[12]
Anyone can download the Postmates Fleet app to become a courier for
Postmates. I could be a Postmates courier, so long as I passed a
criminal background check. I could make Postmates deliveries when and
where I pleased, and extemporaneously indicate my availability at
moments when I need a break from the press of court business. I could
make my deliveries by any form of locomotion I choose: walk, bicycle,
scooter, car, rollerblade, etc.
Luis Vega, at least briefly, thought more of the Postmates
opportunity than did I. He downloaded the app, provided sufficient
information to pass the criminal check, and was thereafter authorized to
use the Postmates service to make deliveries. Mr. Vega indicated he
would be walking to make deliveries. He first logged on to Postmates on
June 8, 2015, and last logged on to Postmates on June 15, 2015. At that
point, he had worked for Postmates for less than a week and had logged
on 12 times for an average of 3 hours and 15 minutes at a time. During
those six days, Mr. Vega rejected or ignored about 50% of the
assignments offered to him. The record was unequivocal that, even if Mr.
Vega requested to make a specific delivery assignment and obtained it,
he could thereafter change his mind and reject it, causing it to be
dumped back into the pool of assignments available to others. Mr. Vega
had no set schedule; he had no supervisor
[13];
and, he chose what deliveries interested him, how to perform
deliveries, the route he would take, and the times at which he would log
on and off. Of the jobs he accepted over those six days, "a lot of
requesters' feedback" indicated that "they weren't receiving the items
requested." Postmates therefore blocked Mr. Vega from the app. Mr. Vega
then filed for unemployment benefits.
In its determination of the matter in August 2015, the Department of
Labor classified Mr. Vega as an employee for the purposes of New York
Unemployment Insurance Law. The Department of Labor's determination that
Mr. Vega was Postmates' employee lists 24 factors supporting that
determination.
A large number of those factual findings are directly
contradicted by the record
[14].
Among those factors are: Mr. Vega was told "when, where, and how the
work was to be performed"; he was required to report to a supervisor and
work an established schedule; he was required to deliver the packages
within a set time; his work would be reviewed; he could not take time
off without Postmates' approval; he was covered by a workers'
compensation policy; he was not free to determine the route of the
delivery; and, he could not perform other deliveries while on route with
Postmates.
None of these factors has support in the record. Each of those
factors was undermined by the testimony before the ALJ, who found that
the Postmates couriers chose when they worked, how they worked, and
where they worked; couriers could and did choose their own routes; Mr.
Vega was not covered by workers' compensation; couriers were free to
reject, ignore, or accept assignments as they chose; and, couriers were
free to work for other companies at the same time as they worked for
Postmates (
id.). Although the Commissioner found that Mr. Vega
"could not engage substitutes or other couriers without your
permission," the record evidence was that Mr. Vega could "hand his phone
to a complete stranger" to complete deliveries. Additionally, the
Department noted as a factor that: "Individuals performing such services
as couriers were previously determined to be your employees." However,
the ALJ expressly stated that she was "not going to be considering it"
because Postmates and its counsel "weren't aware of this determination."
Moreover, counsel for the Commissioner stated, "I didn't really want to
make it a part of the record," after which the ALJ reiterated, "that's
not going to be before me."
Based on the record, which included both exhibits and testimony, the
ALJ held that Mr. Vega was an independent contractor not entitled to
unemployment benefits. Although the Board did not make any finding of
fact contrary to the ALJ's findings, the Board reversed the ALJ's
determination. The Appellate Division reversed the Board's determination
for lack of substantial evidence, citing our decision in
Yoga Vida (
Matter of Vega v Postmates Inc., 162 AD3d 1337
[3d Dept 2018]). The court noted the lack of application or review
process, the lack of supervision, the courier's choice to log on and
accept delivery requests, the courier's choice of route and mode of
transportation, the lack of a required uniform or identification, the
payment system (allowing for payment only upon the completion of a
delivery), and the lack of reimbursements for delivery-related expenses (
id.
at 1338-1339). Although some indicia of control remained, the court
concluded it only showed incidental control, insufficient to render Mr.
Vega an employee (
id. at 1339). To recap: the Commissioner, the
Board and majority conclude that Mr. Vega's slapdash week of activity
made him Postmates' employee; the ALJ and Third Department concluded, as
do I, that it did not
[15]. What accounts for that disagreement? The failure of our precedent to keep up with the times.
II.
"Any employer shall become liable for contributions under [Article
18, the Unemployment Insurance law] if it has paid remuneration of three
hundred dollars or more in any calendar quarter" (Labor Law § 560 [1]).
"Remuneration" in this part of the Labor Law means "every form of
compensation for employment paid by an employer to his employee" (Labor
Law § 517 [1]) and "employment" is defined as "any service under any
contract of employment for hire, express or implied, written or oral"
(Labor Law § 511 [1] [a]), subject to many additions not relevant here
[16].
Thus, Postmates' obligation to pay unemployment insurance contributions
for Mr. Vega turns on whether its agreement with him was "a contract of
employment for hire." That definition of "employment" is circular, so
we have interpreted it to apply what is described as the "common law
test" of employee status (
In re Morton, 284 NY 167, 173 [1940], cf. Community for Creative Non-Violence v Reid, 490 US 730, 740 [1989]), often described as the "control test," when determining liability for unemployment insurance payments.
[17]
Under the control test of employee status, "the critical inquiry in
determining whether an employment relationship exists pertains to the
degree of control exercised by the purported employer over the results
produced or the means used to achieve the results" (
Bynog v Cipriani Group, Inc., 1 NY3d 193, 198 [2003]).
We further explained that "control over the means is the more important
factor to be considered," and distinguished "incidental control over
the results produced without further indicia of control over the means
employed to achieve the results" from other forms of control that would
evince an employment relationship (
Matter of Ted Is Back Corp. [Roberts], 64 NY2d at 726;
see Matter of Hertz Corp. [Commissioner of Labor], 2 NY3d at 735).
However, that means-ends test coexists uneasily with a separate test,
the "overall control" test, where "substantial evidence of control over
important aspects of the services performed other than results or means
is sufficient to establish an employer-employee relationship" (
Matter of Empire State Towing and Recovery Assn., Inc., 15 NY3d 433, 437-438 [2010];
Matter of Concourse Ophthalmology Assocs., P.C., 60 NY2d 734 [1983]
["The board's determination is ... supported by substantial evidence of
control over important aspects of the services performed other than
results or means"]). The "overall control" test is said to apply only
"where the details of the work performed are difficult to control
because of considerations such as professional and ethical
responsibilities" (
Empire State Towing, 15 NY3d at 437-438).
A.
Putting aside the clear lack of record support for a multitude of the
factors relied on by the Department of Labor, the majority's conceptual
error in resolving this case (and, I suspect, a good deal of the
confusion below on the application of the control test) stems from a
lack of decisional clarity about what factors matter when and why. Every
contractual relationship for the provision of services will involve
some control — whether overall or over means-ends — being ceded to the
service-provider and some control being held by the requestor. No
sensible enterprise gives even an indisputably independent contractor
complete control over the "results produced or the means used to achieve
the results." Imagine instructing a contractor to build a house, with
no specification as to the size, layout, style or features to be
included (ends) or a requirement that the contractor comply with local
building laws (means). Absent a more defined legal standard it is
unclear how much control the employer may have over an independent
contractor before that contractor becomes an "employee," or, for that
matter, what makes control "incidental" as compared to non-incidental.
[18]
Matters are especially unclear in the semi-professional world of the
"overall control" test, which tells us only that sometimes control over
"important aspects" other than ends or means matters. But even the
means-ends test is no panacea. Means and ends are not perfectly
polarized. Here, for example, Postmates allows its couriers to choose
whatever method of delivery they wish, but had Mr. Vega opted to deliver
by pogo stick, turning sushi into a poke bowl or burritos into taco
salads, surely he would have been bounced from the app expeditiously.
Postmates undoubtedly cares that its customers receive their dinners
intact, but Postmates' concern for that end, or a ban on the means of
pogo stick deliveries, does not address the question of control for
employment purposes. Both the means (no pogo) and ends (no mush) would
be required whether the delivery person was an independent contractor or
an employee.
Because "control" standing alone is relatively unhelpful, we have
responded by creating a multifactor analysis where no one factor is
determinative and where, as the majority correctly observes, "no
enumerated list of factors can apply to every situation faced by a
worker" (majority op at 5). The Supreme Court of the United States,
reviewing a similar proliferation of factors, noted dryly that "the
traditional agency law criteria offer no paradigm of determinacy" (
Nationwide Mut. Ins. Co. v Darden, 503 US 318, 327 [1992]).
This approach has given us a hash of factors that may be held more or
less probative to the "control" determination depending on who is
performing the analysis; indeed, in the briefing on this case, the
parties point to more than twenty factors, each supported by one or more
of our cases, none of which overruled the other, all of which are
claimed to bear on the control analysis. Yet without providing guidance
as to which factors ought to be weighed, and how weighed, and when
weighed — without providing some precision and clarity as to what the
factors are meant to support
— the existing paradigm ends up
giving the agency free rein to make whatever legal determinations it
pleases until, usually with little explanation, we reverse the Board's
findings for want of "substantial evidence" in an opinion that usually
wants for substantial explanation (
cf. Matter of Charles A. Field Delivery Services [Roberts], 55 NY2d 516, 517 [1985]).
[19]
B.
Our inconsistent, summary precedent makes it nearly impossible to
arrive at a decision in this case that seems in perfect harmony with
what has come before. Reading today's decision, one might think that, in
the future, the Board's employment-status determinations will
unfailingly be affirmed on the grounds of substantial evidence. Instead,
today's decision is just one more bounce of the ball in the opposite
direction whence it came.
In
12 Cornelia St. (
56 NY2d 895 [1982]),
a memorandum opinion, we held that the Unemployment Insurance Appeal
Board's determination that real estate salespersons were employees was
not supported by substantial evidence, because that "determination must
rest on evidence that the company exercises control over the results
produced by its salespersons or the means used to achieve the results" —
and "such control [wa]s lacking" where the salespersons: (1) were paid
commissions; (2) worked whatever hours they chose; (3) were free to
engage in outside employment; (4) bore their own expenses; (5) were not
required to attend meetings or trainings; (6) paid their own premiums
for health insurance; and, (7) found their own leads. Those salespeople
were independent contractors even though the real estate corporation
supplied them with business cards, held regular sales meetings, and
provided them with workers' compensation (
12 Cornelia St., Inc. v Ross, 83 AD2d 681, 682
[3d Dept 1981]). Mr. Vega — like the salespeople — was paid by
commission (he received a percentage of the fee charged to the customer
by Postmates for each delivery, which fee varied by distance), worked
whatever hours he chose, was free to engage in outside employment, bore
his own expenses, was provided no health insurance, and was not required
to attend meetings or trainings (other than one initial meeting on how
to use the app). Yet, despite the "evidence in the record that would
have supported a contrary conclusion" (majority op at 4, citing
Concourse Ophthalmology, 60 NY2d 734 [1983]), in
12 Cornelia St., we reversed the Board's determination as not supported by substantial evidence.
In
Concourse Ophthalmology (60 NY2d at 736
[1983]), another memorandum decision, we upheld the Board's
determination that doctors were employees, laying stress on the alleged
employer's control of: (1) employee schedules; (2) the place of
employment; (3) the appointment-making process; (4) the fee schedule;
(5) ownership of key equipment; (6) administration of bills; and, (7)
allocation of record-keeping responsibilities, even though the purported
employer did not control the "results or means" of the doctors' work.
However, those doctors maintained their own malpractice insurance,
operated substantial outside practices, and "functioned completely
autonomously" (
Matter of Concourse Ophthalmology Assocs., P.C., 89 AD2d 1047, 1048
[3d Dept 1982] [Levine, J., dissenting]). We did not dispute the
putative employer's contention that "the record is devoid of evidence of
control over results or means." Instead, we brushed the means-ends test
aside because "professional services do not lend themselves to such
control." Thus, we affirmed the Board's decision on the grounds that
substantial evidence existed in the record. Following that precedent,
then, where the factors cut in different directions, the Board may have
had "substantial evidence" for its determination here, because Postmates
controlled the delivery-assignment process, the fee schedule,
administration of bills and allocation of record-keeping
responsibilities, even though the first two factors we cited in
Concourse Ophthalmology (regular work schedule and employer determination of place of work) cut against finding Mr. Vega an employee.
In yet another memorandum, we reversed the Board's decision that
salespeople for an aluminum siding installation company were employees,
holding that decision was not supported by substantial evidence (
Ted Is Back, 64 NY2d at 726;
see also Matter of Ted Is Back Corp., 103 AD2d 932, 932
[3d Dept 1984]). We held that "incidental control over the results
produced without further indicia of control over the means employed to
achieve the results will not constitute substantial evidence of an
employer-employee relationship" (
Ted Is Back, 64 NY2d at 726). That "incidental control" included the corporation's supply of form contracts and its retained right to approve contracts (
id.).
That the salespeople were "agents" of the company was not "decisive,
for this is equally true where salespeople are determined to be
independent contractors" (
id.). The Court cited factors including
that the salespeople: (1) worked at their own convenience; (2) were
free to hold outside employment; (3) were not limited to a particular
territory; and, (4) were paid on commissions. Applying that analysis to
this case, we would affirm the order of the Appellate Division that the
Board lacked substantial evidence for its determination because each of
the above factors from
Ted Is Back applies to Mr. Vega; that "incidental control" is insufficient, as a matter of law, to deem Mr. Vega an employee.
We yet again reversed the decision of the Board that a salesperson
was an employee, on the ground that substantial evidence did not support
its determination in
Hertz (2 NY3d at 733).
There, the claimant was a salesperson for Hertz: she visited travel
agencies to promote Hertz's products by making presentations and
distributing sales materials (
id. at 734-735). She was compensated per-visit, was not required to attend meetings, and had minimal supervision (
id.
at 735). On the other hand, Hertz told her what to wear during her
visits, instructed her on what products to promote, barred her from
promoting competing products, and instructed her on how to present Hertz
products (
id.). Despite those factors, which could have
supported the Board's determination under the substantial evidence
standard, we said that she was not an employee as a matter of law,
because Hertz exerted merely "incidental control" (
id.). Mr. Vega
was compensated per delivery; the Hertz salesperson per visit. Mr. Vega
was told where and what to pick up and deliver, just as the Hertz
representative was told what products to promote. Neither was
supervised; neither had to attend meetings. But Mr. Vega was not
prohibited from delivering for competing services even while engaged in a
Postmates delivery and could wear whatever he liked.
Hertz would
lead one to conclude that the order of the Appellate Division must be
affirmed here because the factors determining Mr. Vega's status point
more strongly to independent contractor than the factors on which we
reversed the Board's determination in
Hertz.
Our most recent decision in this area, also a memorandum, is
Yoga Vida.
There, as here, the Department of Labor initially determined Yoga Vida
was liable for unemployment insurance for its non-staff yoga
instructors; as here, an ALJ overruled that determination; next, the
Unemployment Insurance Appeal Board reversed the ALJ's decision,
sustaining the Department's initial determination (
Yoga Vida, 28 NY3d at 1015).
The Appellate Division sustained the Board's determination that the
non-staff yoga instructors were employees. We reversed, holding the
Board's determination was not supported by substantial evidence because
the non-staff instructors made their own schedules, were paid only if
students attended their classes, could work for competitors, and were
not required to attend meetings or trainings (
id.)
[20].
Each of those factors — which are the factors that justified our
reversal as a matter of law — is true as to Mr. Vega: Mr. Vega made his
own schedule, was paid only for deliveries he made, could work and
perform deliveries for other companies even while making deliveries for
Postmates, and was not required to attend meetings or trainings.
Moreover, Mr. Vega did not have to work on a prearranged schedule; the
non-staff instructors did. Mr. Vega did not have to work at his
employer's place of business; the non-staff instructors did. In
Yoga Vida,
we emphasized that Yoga Vida's determination and collection of the fees
that the non-staff instructors received did "not supply sufficient
indicia of control" (
id. at 1016). So too, Postmates' control
over the fees Mr. Vega received should be insufficient to support an
employer-employee relationship
[21]. That the outcome today is the diametric opposite of the outcome arrived at just three years ago in
Yoga Vida,
an outcome that the majority contends was reached by the same standard
as applied here (majority op at 8), shows just how inconstant our "test"
has become.
The facts surrounding Mr. Vega's six-day adventure as a courier
neatly fit into the exertion of mere "incidental control," which does
not provide substantial evidence for a Board's determination of employee
status (
see e.g. Ted Is Back, 64 NY2d at 726).
Mr. Vega retained more than just "some independence to choose [his]
work schedule and delivery route" (majority op at 6) — he had complete
control over his schedule, the hours he logged on, the jobs he accepted
or rejected (or rejected even after accepting them), and the routes he
took when, having accepted a job, he actually made the promised
delivery. Nor does Mr. Vega need to have actual control over "the
service
Postmates provides its customers" (majority op at 6 [emphasis added]),
for that is not the test. The control test applies only to the company's
control over the worker's labor; the worker need not have control over,
or anything to do with, the service provided by the company. Our
precedent may not be consistent, and it certainly makes it difficult for
litigants and lower courts to apply the control test, but at least it
provides this answer: Mr. Vega is far more an "independent contractor"
than the real estate salespeople given business cards by their company
in
12 Cornelia St., the product promoter who was told what to wear and how to present in
Hertz, or the yoga instructors told when, where and what to teach in
Yoga Vida.
III.
The overarching problem in our control test jurisprudence is
exemplified by Mr. Vega's case. The parties here attempt to rely on two
dozen different factors, all of which derive from previous Court of
Appeals' decisions and all of which we have suggested may have some
bearing on the control analysis. However, those factors fail to aid us
in this decision. Factors that seem in some of our cases to provide
support for the determination of an employer-employee relationship do
not always do so (
compare Concourse Ophthalmology, 60 NY2d at 736 [where the company collected and determined fees, supporting the decision that ophthalmologists were employees]
with Yoga Vida,
28 NY3d at 1017 [Fahey, J., dissenting] [where Yoga Vida collected and
fixed the fees of the non-staff instructors, but substantial evidence
did not support the Board's decision that the non-staff instructors were
employees]),
[22]
whereas factors that we previously identified as showing merely
incidental control insufficient to establish an employment relationship,
such as setting one's own schedule, the ability to work for other
companies, and being paid on commission (
see e.g. Ted Is Back, 64 NY2d at 726) are today eschewed by the majority.
It is no surprise, then, that reading the procedural history of this
case or our prior decisions feels like watching a ping-pong match: no
one, not even this Court, knows which combinations of factors are
determinative and which are not. We have held that no one factor is
determinative (
Concourse Ophthalmology, 60 NY2d at 736),
and the majority emphasizes the formlessness of our jurisprudence by
observing that "no enumerated list of factors can apply to every
situation faced by a worker" (majority op at 5). At the same time, the
majority adds a new factor to the list: "the nature of the work" (
id.
). It wields that new factor based on unsupported judgments,
contrasting couriers as "low-paid workers performing unskilled labor who
possess limited discretion over how to do their jobs" (
id. at
6), with yoga instructors who perform work that "is not comparable to
that of a delivery person," because a yoga instructor provides a
"service ... unique to that of the instructor and his or her personal
characteristics" (
id. at 7). We have never before mentioned the
"nature of the work" in the employment context, let alone held that
factor determinative in such cases.
[23]
In any event, adding that factor to our litany makes no sense. The
purpose of the control test, and even the variegated factor analysis, is
to prevent the over-reliance on the
kind of work in the
determination of employment status. Forcing that factor into the control
test provides the opportunity for every courier — regardless of any
analysis of the factors or the degree of control exerted over them — to
be an employee because of the nature of delivery work: if Mr. Vega is an
employee, so is everyone who delivers a tangible good. Had the "nature
of work" been determinative in
Yoga Vida, non-staff yoga
instructors and staff instructors alike would need to have been deemed
employees. Instead, however, this Court held that substantial evidence
did not support the Board's determination that non-staff yoga
instructors were employees by relying on dissimilarities — having
nothing to do with the nature of the work — between the non-staff
instructors and the staff instructors (
Yoga Vida, 28 NY3d at 1015).
If the nature of the work holds as much importance as the majority
declares it does today, the dissimilarities between the non-staff and
staff instructors would have been irrelevant.
For that reason, the majority's reliance on
Matter of Rivera (69 NY2d 679 [1986]), is misplaced. Simply because the employees at issue in
Rivera
were delivery persons does not make that case "indistinguishable"
(majority op at 7). Although similar in many respects, there are several
notable differences: Mr. Vega could accept a delivery assignment and
then later change his mind at any time, even after a customer had been
told that Mr. Vega would deliver it, whereas there is no indication that
the
Rivera couriers could turn back a delivery assignment after
accepting it; Mr. Vega was not given a time limit for completing
deliveries, whereas the
Rivera couriers were; Mr. Vega was free
to choose any means of transportation he wished (which he could vary at
will with no need to inform Postmates), whereas
Rivera required
its couriers to use motor vehicles and to purchase both ordinary
insurance as well as special cargo insurance for their vehicles (
Claim of Rivera, 120 AD2d 852, 854 [3d Dept 1986]).
The addition of a new factor to the control test illustrates the most
concerning aspect of our ever-changing employment determination
decisions. Because the test depends on innumerable factors, which vary
from case to case and opinion to opinion, and we review the Board's
determinations for substantial evidence, the Board is given unbounded
discretion. We will never be able adequately to review their
determinations because they will always rely on factors that we — at one
point or another — have sanctified. "Substantial evidence" review of a
smorgasbord of flavorless factors authorizes unrestrained agency
decision-making.
Without regular examination, modification and explication of our
common law, common-law tests risk falling into incoherence or vagueness.
In the broader sense, this case implicates many factors upon which our
Court and the Appellate Division have relied to reverse an agency
determination as "unsupported by substantial evidence" because the
courts have concluded that the facts relied on by the agency do not
really speak to the ultimate issue of control (
see e.g. Empire State Towing, 15 NY3d at 437;
12 Cornelia St., 56 NY2d at 897-898;
Ted Is Back, 64 NY2d at 726;
Hertz, 2 NY3d at 733;
Yoga Vida, 28 NY3d at 1015-1016).
Our several prior reversals of the Board's decisions, though offering
that "the determination of the appeal board, if supported by substantial
evidence on the record as a whole, is beyond further judicial review
even though there is evidence in the record that would have supported a
contrary decision'" (
Empire State Towing, 15 NY3d at 437 [2010]),
are best understood as reflecting our recognition that we cannot allow
the deferential standard of review to shield the Board from all review,
even if the Board has relied exclusively on factors we have deemed
relevant in determining who is an employee. Of course, the most
important concern for us is to ensure that the law is clear and
consistent as to what employers, workers and the lower courts must
consider in forming and evaluating work relationships. Our terse
memorandum decisions do not serve that purpose.
We need a clear understanding, comprehending the modern realities of
our rapidly evolving economy, of who should be an employee and who an
independent contractor, including whether work relationships should
continue to be measured on that dichotomy. It is past time for the law
to reexamine the definition of work and its application to different
forms of entitlement and obligation. Our current framework, as
inconsistently applied, fails to provide clarity to anyone involved. The
agencies tasked with applying our cases and the courts that attempt to
review those decisions for substantial evidence oscillate in result and
rationale. The common-law test for status as an employee developed in a
vastly different time, when employment was monotonic. Now, it is
cacophonic. The number of workers performing multiple or alternative
jobs has grown dramatically. New technology and the rise of the sharing
economy have driven further changes, including the crowdsourcing of
flexible and low-barrier-to-entry jobs upon which many workers are less
reliant than our traditional notion of career employees. The challenge
is how to apply our inconsistent common-law test in a world where work
looks much different than it did when that test was developed and where
we cannot, if we hold true to the deferential standard of review,
reverse an agency determination so long as it has relied on some of the
factors we have identified as relevant.
The stakes are high. As the California Supreme Court, confronting a similar question, phrased the matter (
Dynamex Operations W. v Superior Ct., 4 Cal 5th 903, 912-13 [2018] [Cantil-Sakaute, C.J.]):
"On the one hand, if a worker should properly be classified as an
employee, the hiring business bears the responsibility of paying federal
Social Security and payroll taxes, unemployment insurance taxes and
state employment taxes, providing worker's compensation insurance, and,
most relevant for the present case, complying with numerous state and
federal statutes and regulations governing the wages, hours, and working
conditions of employees. The worker then obtains the protection of the
applicable labor laws and regulations. On the other hand, if a worker
should properly be classified as an independent contractor, the business
does not bear any of those costs or responsibilities, the worker
obtains none of the numerous labor law benefits, and the public may be
required under applicable laws to assume additional financial burdens
with respect to such workers and their families."
"Although in some circumstances classification as an independent
contractor may be advantageous to workers as well as to businesses, the
risk that workers who should be treated as employees may be improperly
misclassified as independent contractors is significant in light of the
potentially substantial economic incentives that a business may have in
mischaracterizing some workers as independent contractors. Such
incentives include the unfair competitive advantage the business may
obtain over competitors that properly classify similar workers as
employees and that thereby assume the fiscal and other responsibilities
and burdens that an employer owes to its employees. In recent years, the
relevant regulatory agencies of both the federal and state governments
have declared that the misclassification of workers as independent
contractors rather than employees is a very serious problem, depriving
federal and state governments of billions of dollars in tax revenue and
millions of workers of the labor law protections to which they are
entitled."
[24]
Although it is well within the purview of the courts to alter a
common-law test, that is best done incrementally; the complete overhaul
of our common-law employment test to adapt it to the present and future
economy is not a task to which courts are well suited
[25].
Whether, to what degree, and on what basis we wish to provide
unemployment benefits to Postmates couriers generally, or to other
workers in the gig economy, is a policy question best left to the
legislature. Whether the test for that entitlement should be the same as
the test for Postmates' liability if a courier, speeding on an
electrified bicycle to make a timely delivery of a hot dinner, injures a
pedestrian, is also a question best suited to legislative
determination. The role of the courts is to interpret the law and to
clarify it when we can. The accumulation of indecisive, unweighted
factors articulated in our past cases, scrutinized under our highly
deferential standard of review, typically produces either a de facto
lack of review or an uninformative summary reversal. The resulting body
of law is difficult to reconcile and does little to advise agencies and
lower courts (to say nothing of business enterprises or workers) how any
particular work relationship will or should be adjudicated. Today's
decision places further stress on that test through its contradiction of
our recent decision in
Yoga Vida and its incompatibility with
several others in which we found the Board lacked substantial evidence
in circumstances less compelling than this. Nevertheless, until the
legislature steps in, we have an obligation to do our best to reach
consistent results so that both businesses and workers can structure
their affairs with a sound understanding of when the benefits and
obligations of "employment" are imposed or conferred upon them. Whether
other Postmates couriers are employees is not before us. Mr. Vega's case
is, and he is not.
[12]
Not only was Postmates given no opportunity to present evidence as to
other couriers, but the parties were expressly informed by the ALJ, at
the start of the hearing, that the ALJ's determination would be limited
to just Mr. Vega. That neither party addressed the ALJ's limited
determination does not change that determination's scope (majority op at
3 n 1). Thus, the Board's subsequent decision, if read to impose a
contribution requirement on Postmates for Mr. Vega and all other
similarly situated couriers, would implicate due process concerns
because Postmates was expressly instructed that the proceeding would
relate solely to Mr. Vega's claim and not others similarly situated (see e.g. Martin v Ronan, 47 NY2d 488, 490 [1979]["a requisite of due process (is) the opportunity to be heard before one's rights or interests are adversely affected"]).
[13]
Postmates' witness before the ALJ, the regional manager, believed Mr.
Vega had been a bicycle courier, which just goes to show how much
"supervision" of Mr. Vega actually took place.
[14]
Incidentally, Mr. Vega did not appear and presented no evidence at the
hearing; the sole evidence presented came from Postmates.
[15]
At oral argument, counsel for the Board had difficulty pinpointing
when Mr. Vega became an employee of Postmates, eventually settling for
the moment he made his first Postmates delivery.
[16]
I note that "employment" under Article 18 expressly includes "any
service by a person for an employer as an agent-driver or
commission-driver engaged in distributing meat, vegetable, fruit, or
bakery products; beverages other than milk; or laundry or dry-cleaning
services" (Labor Law § 511 [1] [b] [1]), a definition that might
arguably sweep in Mr. Vega if the record showed what he had delivered
(or promised to deliver), but the parties do not direct any arguments to
the possible application of this definition and accordingly I do not
consider it.
[17]
Of course, the Legislature may, for unemployment compensation
purposes, adopt a different definition of "employee." It has done so in
other parts of the Labor Law, providing at Labor Law § 2(7) that one is
employed simply when one is "permitted or suffered to work" for an
employer (cf. Nationwide Mut. Ins. Co. v Darden, 503 US 318, 326 [1992]
[discussing similar language in the federal Fair Labor Standards Act]).
However, that broader definition does not apply to the unemployment
insurance article, which uses the definition discussed above (Labor Law §
510).
[18]
We have never defined "incidental control." Doing so might better
allow us, even if we cannot reach consensus on what meets the
substantial evidence standard, to determine when the facts are not
supported by substantial evidence.
[19] Of our opinions in the unemployment insurance cases since 1981, Villa Maria Inst. of Music v Ross (54 NY2d 691 [1981]), 12 Cornelia St., Inc. v Ross (56 NY2d 895 [1982]), Matter of Concourse Ophthalmology Assoc., P.C. (60 NY2d 734 [1983]), Matter of Ted Is Back Corp. (64 NY2d 725 [1984]), Matter of Rivera (69 NY2d 679 [1986]), Matter of Salamanca Nursing Home, Inc. (68 NY2d 901, 903 [1986]), Matter of Hertz Corp. (Commissioner of Labor) (2 NY3d 733 [2004]), and Matter of Yoga Vida NYC, Inc. (28 NY3d 1013 [2016]) were all summary, memoranda judgments. We have treated this question in a full opinion only in Matter of Charles A. Field Delivery Serv., Inc. (66 NY2d 516 [1985]) and Matter of Empire State Towing and Recovery Assn., Inc. (15 NY3d 433 [2010]).
The profusion of summary memoranda in this area underscores the
incoherence of the conventional test for independent contractor/employee
status when applied to an evolving economy that encompasses new styles
of working.
[20] The majority's claim that our decision in Yoga Vida
"reaffirmed" the substantial evidence standard (majority op at 8)
illustrates the amorphousness of that standard when applied in the
unemployment insurance context. For example, even though "Yoga Vida
generally determines what fee is charged and collects the fee directly
from the students [that] does not supply sufficient indicia of control
over the
instructors" to constitute substantial evidence of employment (Yoga Vida, 28 NY3d at 1016). If the majority is reaffirming the standard we applied in Yoga Vida, that standard has become so elastic as to be whimsical.
[21]
The majority cites a few other distinctions between the non-staff yoga
instructors and Mr. Vega, but those sound more different than they
really are. The yoga instructors' interest in maintaining a "customer
following to be successful" is akin to the customer ratings Mr. Vega
needed to remain successful on the Postmates app (majority op at 7).
Likewise, the ability of the yoga instructors to affect their
compensation to some degree by choosing hourly compensation or a
percentage of class fees corresponds to Mr. Vega's ability to affect his
compensation by taking, e.g., high dollar volume jobs or short-haul
jobs that he could consolidate and deliver simultaneously. Indeed, Mr.
Vega had more control of his compensation than did the yoga instructors,
inasmuch as he could accept a job, immediately see the compensation he
would receive from it, and reject it if it was not to his liking. There
is nothing to suggest the yoga instructors could decline to teach a
class or switch from percentage to hourly compensation if only two
customers appeared for class.
[22] Judge Rivera's concurring observation that Yoga Vida was wrongly decided further emphasizes the incoherence of our decisional law in this area.
[23]
Although the majority points to no prior precedent of ours listing
"nature of the work" among the factors to be considered, we are advised
that because "indicia of control will vary depending on the nature of
the work," it is "obvious" that nature of the work should be included in
the list of factors (majority op at 5 n 3, 8). I do not think it
"obvious" — one way or the other — that differences in the work of
ophthalmologists and aluminum siding salespeople tend to make the former
more controllable than the latter, or that our determination that the
former were employees and the latter independent contractors had
anything to do with the intrinsic nature of their occupations.
[24] See also Joint Task Force on Employee Misclassification, Annual Report 2015,
https://www.labor.ny.gov/agencyinfo/PDFs/Misclassification-Task-Force-Report-2-1-2015.pdf
(discussing at length the effect of employee misclassification on New
York state in particular); Sarah Jeong, Strike All You Want. Uber Won't Pay a Living Wage,
NY Times (May 10, 2019),
https://www.nytimes.com/2019/05/10/opinion/uber-ipo.html (discussing
studies showing that in New York City, about half of ride-hailing
drivers are supporting families with children, but earn so little that
40 percent of those drivers qualify for Medicaid and another 18 percent
qualify for food stamps); Noam Scheiber, Uber and Other Gig Companies Maneuver to Shape Labor Rules,
NY Times (Mar. 26, 2019),
https://www.nytimes.com/2019/03/26/business/economy/gig-economy-lobbying.html
(discussing the "highly disruptive" effect of proposals to classify
large numbers of gig workers as employees).
[25]
Our call for a new test need not be preserved (majority op at 5 n 3).
In fact, because the employment test is one created by the courts, it is
our job to change it if necessary — regardless of if the parties call
for it. However, it is the role of the legislature to make policy; here,
where the majority's holding overturns a decision of this Court from
just three years prior, it is clear we are in sore need of legislative
decision-making, not solely judicial re-interpretation.
