New York Appellate Court Holds that Courier for a Gig Economy Business is an Independent Contractor

On June 22, 2018, the New York Supreme Court Appellate Division, Third Department, found that a courier who performed delivery services was as an independent contractor, and not an employee, for unemployment insurance purposes. Matter of Vega , 2018 N.Y. Slip Op. 04610 (3d Dep’t. 2018).

In Matter of Vega, Postmates, a company which operates a web-based delivery service, appealed the decision of the Unemployment Insurance Appeal Board (the “Board”), which determined that an employer-employee relationship existed between Postmates and a former employee. The former employee (the “claimant”) applied for unemployment insurance benefits after Postmates terminated its relationship with him. The Unemployment Insurance Appeal Board, reversing a decision by an Administrative Law Judge, deemed Postmates liable for additional unemployment insurance contributions on remuneration paid to claimant and those similarly situated.

On appeal, the Third Department overturned the Board’s decision and held that the relationship between claimant and Postmates lacked the requisite indicia of supervision, direction and control necessary to establish an employer-employee relationship. In making its determination, the court noted that, “The Board’s determination of an employment relationship will be upheld if supported by substantial evidence; however, ‘[i]ncidental 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.’” Id. (citations omitted). The court found that although proof was submitted with respect to Postmates’ incidental control over the couriers, such proof did not constitute substantial evidence of an employer-employee relationship to the extent that it failed to provide sufficient indicia of Postmates’ control over the means by which the couriers perform their work. 

The decision is significant in that it lends further guidance as to classification of employees versus independent contractors, especially in gig economy positions that are web-based and have a high degree of flexibility and autonomy.