Vega v. Comm'r of Labor, No. 13

• Decision Date: 26 March 2020
• Docket Number: No. 13
• Parties: In the MATTER OF the Claim of Luis A. VEGA, Respondent, Postmates Inc., Respondent, v. Commissioner of Labor, Appellant.
• Court: New York Court of Appeals Court of Appeals

35 N.Y.3d 131

149 N.E.3d 401

125 N.Y.S.3d 640

In the MATTER OF the Claim of Luis A. VEGA, Respondent,

Postmates Inc., Respondent,

v.Commissioner of Labor, Appellant.

No. 13

Court of Appeals of New York.

March 26, 2020

OPINION OF THE COURT

Chief Judge DiFIORE.

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 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."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 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 A.D.3d 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).

Unemployment insurance is temporary income for eligible employees who lose their jobs through no fault of their own (see Labor Law § 501 ). The Commissioner of Labor is responsible for administering the State's unemployment benefits scheme (see id. § 530)—meaning the Department of Labor is the body that determines, on a case-by-case basis, whether workers are employees for whom contributions to the unemployment insurance fund must be made rather than independent contractors for whom no such contribution need be made (see id. § 570). The Department's determinations are subject to review by the Board upon appeal (id. § 621). A determination of the 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 conclusion" ( Matter of Concourse Ophthalmology Assoc. [Roberts], 60 N.Y.2d 734, 736, 469 N.Y.S.2d 78, 456 N.E.2d 1201 [1983] ; see also Matter of Charles A. Field Delivery Serv. [Roberts], 66 N.Y.2d 516, 521, 498 N.Y.S.2d 111, 488 N.E.2d 1223 [1985] ). Substantial evidence is a "minimal standard" requiring "less than a preponderance of the evidence" ( Matter of Haug v. State Univ. of N.Y. at Potsdam, 32 N.Y.3d 1044, 1045, 87 N.Y.S.3d 146, 112 N.E.3d 323 [2018] [quotation marks and citations omitted] ). As such, if the evidence "reasonably supports the [B]oard's choice, we may not interpose our judgment to reach a contrary conclusion" ( Matter of MNORX, Inc. [Ross], 46 N.Y.2d 985, 986, 416 N.Y.S.2d 228, 389 N.E.2d 823 [1979] ; see also Matter of Villa Maria Inst. of Music [Ross], 54 N.Y.2d 691, 693, 442 N.Y.S.2d 972, 426 N.E.2d 466 [1981] ).

As relevant here, under the Labor Law, "employment" is broadly defined as "any service under any contract of employment for hire, express or implied, written, or oral" ( Labor Law § 511[1][a] ). Traditionally, the Board considers a number of factors in determining whether a worker is an employee or an independent contractor, examining "[a]ll aspects of the arrangement" ( Villa Maria, 54 N.Y.2d at 692, 442 N.Y.S.2d 972, 426 N.E.2d 466 ). But the touchstone of the analysis is whether the employer exercised control over the results produced by the worker or the means used to achieve the results (see Concourse Ophthalmology, 60 N.Y.2d at 736, 469 N.Y.S.2d 78, 456 N.E.2d 1201 ).³ The doctrine is necessarily flexible because no enumerated list of factors can apply to every situation faced by a worker, and the relevant indicia of control will necessarily vary depending on the nature of the work.⁴

Here, there is substantial evidence in the record to support the Board's determination that Postmates exercised control over its couriers sufficient to render them employees rather than independent contractors operating their own businesses. The company is operated through Postmates' digital platform, accessed via smartphone app, which connects customers to Postmates couriers, without whom the company could not operate. While couriers decide when to log into the Postmates' app and accept delivery jobs, the company controls the assignment of deliveries by determining which couriers have access to possible delivery jobs. Postmates informs couriers where requested goods are to be delivered only after a courier has accepted the assignment. Customers cannot request that the job be performed by a particular worker. In the event a courier becomes unavailable after accepting a job, Postmates—not the courier—finds a replacement. Although Postmates does not dictate the exact routes couriers must take between the pick-up and delivery locations, the company tracks courier location during deliveries in real time on the omnipresent app, providing customers an estimated time of arrival for their deliveries. The couriers' compensation, which the company unilaterally fixes and the couriers have no ability to negotiate, are paid to the couriers by Postmates. Postmates, not its couriers, bears the loss when customers do not pay. Because the total fee charged by Postmates is based solely on the distance of the delivery and couriers are not given that information in advance, they are unable to determine their share until after accepting a job. Further, Postmates unilaterally sets the delivery fees, for which it bills the customers directly through the app. Couriers receive a company sponsored "PEX" card which they may use to purchase the customers' requested items, when necessary. Postmates handles all customer complaints and, in some circumstances, retains liability to the customer for incorrect or damaged deliveries.

Postmates exercises more than "incidental control" over its couriers—low-paid workers performing unskilled labor who possess limited discretion over how to do their jobs. That the couriers retain some independence to choose their work schedule and delivery route does not mean that they have actual control over their work or the service Postmates provides its customers; indeed, there is substantial evidence for the Board's conclusion that Postmates dominates the significant aspects of its couriers' work by dictating to which customers they can deliver, where to deliver the requested items, effectively limiting the time frame for delivery and controlling all aspects of pricing and payment.

Although the operative technology has changed in the interim decades, this case is indistinguishable from Matter of Rivera, where we held that substantial evidence supported the Board's conclusion that a similar delivery person was an employee of the delivery company—even though he set his own delivery routes and did not have a set work schedule but called the company's dispatcher whenever he wished to engage in work, accepting only the jobs he desired (see Matter of Rivera [State Line Delivery Serv.–Roberts], 69 N.Y.2d 679, 512 N.Y.S.2d 14, 504 N.E.2d 381 [1986], cert denied 481 U.S. 1049, 107 S.Ct. 2181, 95...