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Matter of Vega

Court of Appeals of New York

March 26, 2020, Decided

No. 13

Opinion

DiFIORE, Chief Judge:

The 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. Because there was record support for the Board's finding that the couriers were employees, we reverse the Appellate Division order and reinstate the Board's decision.

Postmates is a delivery business that uses a website and smartphone application to dispatch couriers to pick-up and deliver goods from local restaurants and stores to customers in cities across the United States—deliveries that are, for the most part, completed within an hour. Postmates solicits and hires its couriers, who undergo background [*2]  checks before being approved to work by Postmates. Once they are approved, the couriers decide when to log into the application and which delivery jobs to accept. Once a courier accepts a delivery job made available through the application, the courier receives additional information about the job from Postmates, including the destination for the delivery. After completing a job, Postmates pays the couriers 80% of the delivery fees charged to customers, and payments are made by the customer directly to Postmates, which pays its couriers even when the fees are not collected from customers. Couriers' pay and the delivery fee are both nonnegotiable.

Claimant Luis Vega worked as a Postmates courier in June 2015. Based on negative reviews from customers alleging fraudulent activity, Postmates blocked claimant from using the application. Thereafter, claimant filed for unemployment benefits. In August 2015, the Department of Labor, based in part on a statement of Mr. Vega, initially determined that claimant was an employee of Postmates, requiring that Postmates pay unemployment insurance contributions on Mr. Vega's earnings, as well as on the earnings of "all other persons similarly employed." [*3] 1 After Postmates disputed the determination, a hearing was held before an administrative law judge (ALJ) who sustained Postmates' objection, concluding that claimant was an independent contractor and reasoning that Postmates did not exercise sufficient supervision, direction and control over claimant to establish an employer-employee relationship. The Commissioner appealed the ALJ's decision to the Board, which reversed the ALJ, overruled Postmates' objection and sustained the Department's initial determination that claimant was an employee. After making findings of fact regarding the operation and logistics of Postmates' delivery business, the Board concluded that "claimant and any other on-demand couriers (delivery drivers) similarly situated" were employees because Postmates exercised, or reserved the right to exercise, control over their services.2

Postmates appealed to the Appellate Division. With two Justices dissenting, the Appellate Division reversed the Board's determination and remitted to the Board for further proceedings not inconsistent with the court's decision. The Appellate Division concluded that "[w]hile proof was submitted with respect to Postmates' incidental control [*4]  over the couriers," the proof "d[id] not constitute substantial evidence of an employer-employee relationship to the extent that it fail[ed] to provide sufficient indicia of Postmates' control over the means by which these couriers perform their work" (162 AD3d 1337, 1339, 78 N.Y.S.3d 810 [3d Dept 2018]). The dissenting Justices would have confirmed the Board decision, concluding that there was substantial evidence supporting its determination that claimant was an employee of Postmates. The Commissioner appeals, pursuant to CPLR 5601 (a).

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2020 N.Y. LEXIS 655 *; 2020 NY Slip Op 02094 **; Unemployment Ins. Rep. (CCH) P13,016

 [**1]  In the Matter of the Claim of Luis A. Vega, Respondent, Postmates Inc., Respondent, Commissioner of Labor, Appellant.

Notice: THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

 THIS OPINION IS UNCORRECTED AND SUBJECT TO REVISION BEFORE PUBLICATION IN THE OFFICIAL REPORTS.

Prior History: Matter of Vega (Postmates Inc.-Commissioner of Labor), 162 A.D.3d 1337, 78 N.Y.S.3d 810, 2018 N.Y. App. Div. LEXIS 4566 (June 21, 2018)

Disposition: Order reversed, with costs, and decision of the Unemployment Insurance Appeal Board reinstated.

CORE TERMS

couriers, delivery, factors, customers, employees, substantial evidence, independent contractor, instructors, Yoga, unemployment, claimant, entrepreneurial, decisions, non-staff, unemployment insurance, employment law, businessperson, deliver, incidental, hire, controlling test, service provider, determinations, supervision, details, cases, route, employment relationship, employer-employee, courts

Business & Corporate Compliance, Disability & Unemployment Insurance, Unemployment Compensation, Scope & Definitions, Labor & Employment Law, Review of Benefit Determinations, Benefit Entitlements