Court of Appeals: Postmates Couriers Are “Employees” For Purposes of Unemployment Insurance

In Matter of Vega (Postmates Inc. – Commissioner of Labor), 2020 NY Slip Op 02094 (NY Ct. App. March 26, 2020), the New York Court of Appeals – which, for non-NY practitioners, is our highest state-level appellate court – held that Postmates couriers are “employees” for purposes of unemployment benefits.

This case arises from a claim by a Postmates courier, Vega, for unemployment benefits after Postmates blocked Vega from using the app. After winding its way through the system, the Unemployment Insurance Appeals Board concluded that claimant and similarly-situated couriers were employees because Postmates exercised, or reserved the right to exercise, control over their services. The Appellate Division reversed and remanded (with two Justices dissenting), finding that the submitted 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.” See 162 AD3d 1337, 1339 [3d Dept 2018]. In this decision, the Court of Appeals reverses the Appellate Division.

The Court provides the following summary of the relevant law:

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. Substantial evidence is a minimal standard requiring less than a preponderance of the evidence. As such, if the evidence reasonably supports the [B]oard’s choice, we may not interpose our judgment to reach a contrary conclusion.

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. 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. 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. [Citations, footnotes, and internal quotation marks omitted.]

Applying the law, the court concluded that “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 court explained:

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.

Notably, the court found this case indistinguishable (except as to the operative technology) from the case of Matter of Rivera, 69 NY2d 679 [1986], where the Court of Appeals found 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.