A New York intermediate appellate court handed Postmates a victory in the ongoing battle over employment status in the gig economy.

A panel of the Appellate Division for the Third Judicial Department voted three-to-two to overturn the New York Unemployment Insurance Board's finding that a courier should have been classified as an employee, making Postmates liable for unemployment insurance contributions. The appellate division explained that the relationship between Postmates and the courier lacked "the requisite indicia of supervision, direction and control necessary to establish an employer-employee relationship". The court focused on the fact that couriers:

  • are not required to report to any supervisor;
  • unilaterally retain unfettered discretion as to whether to log on to the Postmates platform; and
  • are free to work as much or little as they want – there is no set work schedule and no requirement to complete a minimum or maximum number of deliveries.

Moreover, couriers are free to choose the mode of transport to make deliveries and which route to take. The court also relied on the fact that the couriers can simultaneously work for other companies, including Postmates' direct competitors, and are not required to wear a uniform:

The fact that Postmates determines the fee to be charged, determines the rate to be paid, [and] tracks the subject deliveries in real time and handles customer complaints… does not constitute substantial evidence of an employer-employee relationship.

The appellate division's decision is the latest ruling on employee classification status in the gig economy. While the decision interprets New York's unemployment law, it will likely be cited by employers more broadly. Although the Postmates decision is not binding on courts outside of New York's Third Department, it provides useful information to gig economy companies on how to structure their operations in jurisdictions where classification status is largely determined by the employer's level of control.

For further information on this topic please contact Ruth Zadikany at Mayer Brown LLP's Los Angeles office by telephone (+1 213 229 9500) or email ([email protected]). Alternatively, contact Andrew S Rosenman, Corwin J Carr or Richard E Nowak at Mayer Brown LLP's Chicago office by telephone (+1 312 782 0600) or email ([email protected], [email protected] or [email protected]). The Mayer Brown LLP website can be accessed at www.mayerbrown.com.

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