New York’s Highest Court Rules That Certain Gig Workers are Entitled to Unemployment Benefits

In the midst of the legal issues raised by the CARES Act and other matters stemming from the COVID-19 crisis, one of the questions has been whether “gig workers” are entitled to unemployment insurance benefits. As part of the CARES Act, Pandemic Unemployment Assistance (PUA) was intended to provide payment to workers “not traditionally eligible for unemployment benefits” (self-employed, independent contractors, workers with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.

In the State of New York, we are getting closer to a definitive answer, though not from the CARES Act but from the New York Court of Appeals, New York’s highest court, which issued a decision Thursday, March 26, 2020, in Matter of Vega (Postmates, Inc.) v Commissioner of Labor, 2020 WL 1452612.

One of the biggest issues is the varying definition of “gig.”  I summarize and quote from that decision.  The quotes may be a little lengthy but will be helpful in applying this case to other circumstances and workers. The Court of Appeals determined that THESE gig workers, at least, ARE entitled to collect unemployment benefits.  The decision was written by Chief Judge DiFiore. She said, “The majority of workers in the app-enabled gig economy come from this economically vulnerable demographic . . . . Although the Unemployment Insurance Law was passed decades before the digital age, today’s app-enabled gig worker is subject to the same devastating financial ‘insecurity’ faced by prior generations of unemployed wage earners and which initially motivated legislators to act” to create the unemployment insurance program.

This case involved “Postmates,” “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.”

The claimant, “Vega,” worked as one of those “couriers” but “Based on negative reviews from customers . . . Postmates blocked [him] from using the application” and he filed for unemployment benefits.

The Court recognized that “Unemployment insurance is temporary income for eligible employees who lose their jobs through no fault of their own.”  If a worker is an “employee” unemployment contributions must be made, “rather than independent contractors for whom no such contribution need be made.”

Under the Labor Law, “employment” is broadly defined as “any service under any contract of employment for hire, express or implied, written, or oral.” The key factor in that determination “is whether the employer exercised control over the results produced by the worker or the means used to achieve the results.”

Here, “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.”

The Court continued “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 . . . 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.”

“Customers cannot choose, nor do they have reason to choose, a particular individual to perform the delivery . . . Postmates’ couriers do not have the ability to create a following or generate their own customer base. Instead, Postmates has complete control over the means by which it obtains customers, how the customer is connected to the delivery person, and whether and how its couriers are compensated.”

These gig workers were considered employees and entitled to New York State unemployment benefits.

The Court’s analysis and conclusion are in accord with the trend of its decisions that the definition of “employee” is broad and expanding.  Likewise, these employees should be entitled to the Federal Pandemic Unemployment Assistance benefits.

Disclaimer:

This article is for informational purposes only and does not constitute legal or business advice. If your business or organization requires assistance, please contact Joseph Milano, Esq., at jmilano@cbmslaw.com