In re Empire State Towing and Recovery Ass'n, Inc.

• Decision Date: 26 October 2010
• Citation: 912 N.Y.S.2d 551,15 N.Y.3d 433,938 N.E.2d 984
• Parties: In the Matter of EMPIRE STATE TOWING AND RECOVERY ASSOCIATION, INC., Appellant. Commissioner of Labor, Respondent.
• Court: New York Court of Appeals Court of Appeals

938 N.E.2d 984

15 N.Y.3d 433

912 N.Y.S.2d 551

In the Matter of EMPIRE STATE TOWING AND RECOVERY ASSOCIATION, INC., Appellant. Commissioner of Labor, Respondent.

Court of Appeals of New York.

Oct. 26, 2010.

Peter B. O'Connell, Albany, for appellant.

Andrew M. Cuomo, Attorney General, New York City (Richard O. Jackson, Barbara D. Underwood and Richard hearing of counsel), for respondent.

OPINION OF THE COURT

JONES, J.

The issue before this Court is whether there is substantial evidence in the record to support the Unemployment Insurance Appeal Board's finding of an employer-employee relationship. We hold there is not.

Peter O'Connell maintains a law practice in Albany that focuses on government relations and lobbying. Appellant Empire State Towing and Recovery Association, Inc., an association that represents members in the tow truck operating business, retained O'Connell for legal and lobbying services. In 1997, Empire State Towing and O'Connell entered into a written agreement in which O'Connell would perform administrative services as the executive director, in addition to his legal and lobbying services.

Pursuant to the written agreement, O'Connell maintained a telephone and computer database in the name of the association, mailed dues and membership materials, mailed periodic financial statements to board members, and coordinated publication of a journal. He also attended board meetings, maintained a bank account, and had check writing authority up to $500.For greater monetary amounts, O'Connell had to submit documentation accounting for the required amount and obtain the signature of Empire State Towing's treasurer. O'Connell performed all these services from his own law office, was free to set his own schedule, and was not working exclusively for the association.

In 2004, a part-time assistant was hired to help O'Connell in his duties as executive director. It is conceded that the part-time assistant was an employee of the association. In 2006, O'Connell relinquished his duties as executive director.

The Commissioner of Labor determined through an audit of Empire State Towing, for the period of January 1, 2004 through December 31, 2005, that O'Connell was its employee and assessed $617.53 in additional unemployment insurance payments. Empire State Towing disputed the finding

[938 N.E.2d 986, 912 N.Y.S.2d 553]

on the ground that O'Connell was an independent contractor, and a hearing was held before an administrative law judge. The administrative law judge sustained the determination of the Commissioner on the basis that the evidence showed an exercise of control by Empire State Towing over O'Connell's duties as executive director.

An appeal was taken to the Unemployment Insurance Appeal Board which affirmed the determination of the administrative law judge. The Appeal Board found that there was "credible evidence" that the employer "exercised or reserved the right to exercise sufficient supervision, direction, and/or control to establish" an employer-employee relationship. Consequently, Empire State Towing filed a notice of appeal with the Appellate Division.

The Appellate Division affirmed the prior determination on the grounds that the Appeal Board's decision was based on substantial evidence, specifically referring to the fact that the association (1) furnished office space and equipment, (2) reimbursed O'Connell's expenses, and (3) required O'Connell to submit reports and attend meetings (62 A.D.3d 1129, 879 N.Y.S.2d 238 [3d Dept.2009] ). This Court granted appellant Empire State Towing's motion for leave to appeal (13 N.Y.3d 712, 891 N.Y.S.2d 691, 920 N.E.2d 96 [2009] ), and we now reverse.

Empire State Towing argues that O'Connell is an independent contractor and that the earlier determinations have incorrectly focused on his administrative duties and the end results rather than on the exercise of control over the means used toachieve those results. The Commissioner contends that there is substantial evidence of control in the record to support the earlier findings, such as the association's required approval for checks over $500. Furthermore, the Commissioner asks this Court to apply the "overall control" test because O'Connell enjoyed autonomy and discretion as executive director of the association.

It is well-settled that

"[w]hether an employment relationship exists within the meaning of the unemployment insurance law is a question of fact, no one factor is determinative and 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" ( Matter of Concourse Ophthalmology Assoc. [Roberts], 60 N.Y.2d 734, 736, 469 N.Y.S.2d 78, 456 N.E.2d 1201 [1983]; Matter of King's Brass Ceremonial [Commissioner of Labor], 75 A.D.3d 712, 904 N.Y.S.2d 543 [3d Dept.2010]; Matter of Rosen [Vidicom, Inc.-Commissioner of Labor], 73 A.D.3d 1352, 901 N.Y.S.2d 401 [3d Dept.2010] ).

An employer-employee relationship exists when the evidence shows that the employer exercises control over the results produced or the means used to achieve the results ( see Matter of 12 Cornelia St. [Ross], 56 N.Y.2d 895, 897, 453 N.Y.S.2d 402, 438 N.E.2d 1117 [1982] ). However, "control over the means is the more important factor to be considered" ( Matter of Ted Is Back Corp. [Roberts], 64 N.Y.2d 725, 726, 485 N.Y.S.2d 742, 475 N.E.2d 113 [1984]; see Matter of Bedin [Trussardi (USA)-Commissioner of Labor], 257 A.D.2d 809, 684 N.Y.S.2d 653 [3d Dept.1999] ). "Incidental 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" ( Matter of Hertz Corp....