Contracted or Employed? Legal Status of “Gig” Workers Remains Uncertain

In the modern employment world, people are increasingly taking advantage of the “gig” businesses, like Uber, GrubHub, or Upwork, as a full-time job. While the flexibility of these gig jobs is enticing, those who work for these gig businesses need to understand the nature of their relationship, specifically: are they an employee or a contractor? Many people view themselves as employees, especially when they rely on a gig business as their main source of income, however, in Matter of Vega [Postmates Inc.], decided June 21, 2018, the New York Appellate Division of the Third Department issued an opinion addressing this question by examining the working relationship of a Postmates delivery worker, Mr. Vega. Mr. Vega had been terminated and sought unemployment insurance benefits, which Postmates opposed on the grounds that Mr. Vega was not an employee and thus not entitled to the benefits. The Department of Labor Commissioner ultimately decided that Mr. Vega qualified as an employee. Postmates appealed the decision of the Commissioner and in Matter of Vega [Postmates Inc.], the court overturned the Commissioner’s decision, finding that there was no employment relationship.

In finding no employment relationship, the Court applied the traditional “manner and means” standard for assessing employee or contractor status: “Whether 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 factors cited by the Court in support of the finding of independent contractor status included:

• To “apply” for the position, the couriers downloaded Postmates’ software app and provided their identifying information; there was no employment application or interview.
• The couriers were not required to report to any supervisor.
• The individuals retained the unfettered discretion on when (if ever) to log on to Postmates’ platform and actually work.
• When a courier did log on to the platform, indicating his/her availability for deliveries, the courier was free to work as much or as little as he/she wanted; no set work schedule, no minimum time requirement, no minimum or maximum requirement on the number of deliveries.
• When contacted about an available delivery, the courier could accept, reject, or ignore a delivery request, without penalty.
• The courier was free to simultaneously work for other companies, including Postmates’ direct competitors.
• The couriers chose their mode of transportation and maintained their own vehicles.
• There were no prescribed routes, no uniforms, no identification cards or logos.
• The couriers were only paid for the deliveries they completed and they were not reimbursed for any of their delivery-related expenses.

The fact that Postmates conducted criminal background checks, provided orientation sessions, determined the fee to be charged customers and the rates paid to couriers, tracked the deliveries in real time, handled customer complaints, and prohibited the couriers from hiring others to complete the deliveries was not persuasive to the Court.

The Court was similarly unmoved by the fact that Postmates, as a business, could not function without the individuals accepting/completing deliveries. In other legal contexts, whether the individual is providing a service that is essential to business operations or merely ancillary support is a critical factor in the employment status analysis. These gig businesses often rely on an abundant supply of workers to perform essential business functions while exercising little control over the manner and means of service. As a result, the competing legal standards are at odds, and, with two dissenting justices supporting the New York Commissioner of Labor position that there was ample evidence supporting an employment relationship, there is a high likelihood that this case will go to the New York Court of Appeals as there is a clear disagreement between the New York Commissioner of Labor and the Court.

Such a disagreement between an agency and the courts creates uncertainty for workers and business owners alike, and because this decision was clearly a fact-intensive analysis there remains a significant grey area surrounding gig businesses and the treatment of their workers. If you feel like you are an employee being treated as an independent contractor you may have the right to take legal action. A careful legal analysis of the individual facts and circumstances will provide guidance and clarity.

For more information or to schedule a consultation to discuss your situation, contact NY Employment Lawyers Borrelli & Associates, P.L.L.C.