Trial News

The New York Court of Appeals has reinstated a decision by the state’s Unemployment Insurance Appeals Board in favor of couriers working for the delivery service Postmates, Inc. The state high court ruled that there was “record support for the Board’s finding that the couriers were employees,” not independent contractors, and thus entitled to unemployment insurance. (Matter of Luis A. Vega, 2020 WL 1452612 (N.Y. Mar. 26, 2020).) 

Postmates customers can use the company website and app to order food and goods for delivery. The company connects these orders to couriers who pick up the items and deliver them. Before couriers are hired by Postmates, they must pass background checks. Once approved, couriers decide when to log into the app and which jobs to accept—but do not receive details about delivery locations until after they have accepted a job. After deliveries are completed, Postmates pays couriers 80% of the delivery fee the company charged, and this fee and pay rate are nonnegotiable.

Luis Vega worked as a Postmates courier but was blocked from the app in 2015 after receiving negative reviews from Postmates customers. Vega filed for unemployment benefits, and the Board ultimately concluded that he 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.” An appellate court reversed the Board’s decision, and the Board commissioner appealed to the New York Court of Appeals.

The state high court noted that the “touchstone” of the Board’s analysis is whether the “employer exercised control over the results produced by the worker or the means used to achieve the results.” So long as the Board’s conclusion is “supported by substantial evidence on the record as a whole,” it is not subject to judicial review. Here, the court found that this standard was met.

The court pointed to several facts in the record that supported the Board’s determination that Postmates couriers are company employees. For example, although the company does not set the routes couriers must follow, it tracks courier locations to provide estimated delivery times. Postmates also unilaterally sets the couriers’ compensation, and because the delivery fee is based solely on the distance traveled—which couriers are not told before accepting a job—couriers cannot pick and choose assignments based on potential pay. The court reinstated the Board’s decision, writing that: “[T]here 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, . . . and controlling all aspects of pricing and payment.”

The court noted that, although technology had advanced, the facts surrounding Vega’s claim were “indistinguishable” from those in Matter of Rivera (69 N.Y.2d 679 (N.Y. 1986)), in which the court agreed with the Board that a delivery person who set his own routes and did not have a set work schedule should still be classified as an employee. The court also distinguished Vega’s claim from Matter of Yoga Vida NYC, Inc. (28 N.Y.3d 1013 (N.Y. 2016)), in which it ruled that certain non-staff yoga instructors were not employees of a yoga studio. The court said that, in contrast to those instructors, Postmates couriers cannot be requested by customers—meaning that couriers “do not have the ability to create a following to generate their own customers base” like independent contractors do.  

New York City employment attorney Christopher McNerney applauded the decision as a strong ruling in support of workers’ rights. “The majority does a great job of digging into the realities of this type of gig work. In general, these are low-skill, low-wage workers, and every aspect of their employment is completely controlled by the company. To me, the court’s comparison between these couriers and yoga instructors highlights a key difference and reason why the former are not independent contractors—they are not able to leverage their skill sets to negotiate contracts or job opportunities.”

McNerney said that although the decision is precedential in the state unemployment insurance context, he believes it will have a persuasive effect in other areas. “The issue of the employer’s level of control comes up frequently. For example, it’s critical in litigation challenging employee misclassification under wage and hours laws. The court’s analysis and ruling that Postmates’s control over its couriers was sufficient to classify them as employees could be highly relevant to other decision-makers. It’s even possible this decision could foreshadow New York adopting a more worker-friendly employment test, like the ‘ABC Test’ used in some other states.”

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