As most readers are probably aware, the debate about whether drivers in this industry are independent contractors or employees continues to rage on, and that is particularly true when it comes to the question of whether drivers are entitled to unemployment insurance benefits when they stop working for a base. While the issue is not black and white, you’d hardly know that if you’re located here in New York where my practice is based.

Specifically, during the course of the past two years I have seen what can best be described as a rash of unemployment insurance claims filed by former drivers. In just about every one of these cases, the New York State Department of Labor’s Liability and Determination Section (L&D) has rendered an initial determination finding the claimant driver to be an employee of the company.

For those of you who have been lucky enough to have never received one of these determinations, you should know that before they are rendered, the DOL typically submits a lengthy list of questions to the company about its methods of operation. Questions about things such as who supplies the vehicle? Who pays for expenses? Can the driver reject calls? Who sets the driver’s hours? Does he or she work for competitors? The list goes on and on.

We always respond to these inquiries with very detailed information. Despite the fact that each company operates differently, with few exceptions we have received uniform “rubber stamp” determinations finding the driver to be an employee, regardless of the information provided. Talk about unfair!

Fortunately, an initial determination by L&D is not the end of the story. A claimed employer has the right to request a hearing before the Unemployment Insurance Appeal Board. I am pleased to report that after requesting and participating in two such hearings on behalf of Juno USA, LP, an administrative law judge (ALJ) recently rendered decisions overruling the initial determinations rendered against the company and finding the claimant drivers to be independent contractors.

If you have been following the news, you probably know that Uber has fared poorly in the UI arena over the course of the past three or so years, despite having been represented in those proceedings by counsel more than competent to handle the matters. In fact, earlier this the year Uber completely abandoned its appeal of an ALJ’s decision finding a group of its New York drivers to be employees of the company.

So why the different outcomes? The ALJ that handled the Juno hearings was fully familiar with the Uber proceedings, yet he expressly stated in his decisions that he found the facts of the Uber cases to be distinguishable from the case before him. The answer undoubtedly lies in the lengthy discussion of control found in the Uber decision… a discussion absent from the Juno decisions.

Specifically, the UIAB’s decision in Uber cites, among other things, that company’s overbearing training and supervision of its drivers, including its heavy reliance upon customer feedback (which, if adverse, could lead to the driver’s termination), its practice of issuing warnings to drivers if performance was not satisfactory and its use of GPS to effectively supervise drivers in the performance of their work.

It is well-settled that the exercise of a minimal level of control will not give rise to an employment relationship. However, if a company steps over the proverbial line and attempts to control numerous aspects of the parties’ relationship (such as dictating hours, prohibiting drivers from working for competitors, specifying how work is to be performed, disciplining drivers, etc.), an employment relationship will be found.

In contrast with the facts presented in the aforementioned Uber case, in each of the Juno cases the ALJ determined that substantial evidence pointed to the absence of an employment relationship, leading him to overrule the initial determination. Among other factors cited in the decisions, the ALJ noted (a) Juno did not set the claimant’s schedule; (b) the claimant did work with competitors; (c) the company did not determine the type of vehicle driven; (d) the company did not provide the claimant with any materials; (e) drivers could rate their passengers; (f) the claimant did not have to display Juno’s logo or wear a uniform; (g) the claimant did not receive fringe benefits; and (h) Juno did not instruct claimant on how to perform his work.

While there is a degree of overlap between the facts presented in the Uber case and those presented in the Juno cases, as I mentioned above Uber was found to have exercised a significant degree of control. Take for example the different approaches the two companies take to the use of GPS. Among many other things, Uber uses GPS in order to actively monitor its drivers and issue instructions (such as “slow down”), and to dictate the route the driver is required to take. Juno on the other hand uses GPS primarily for purposes of recording the pick-up and drop-off point, to suggest routes, and to resolve billing inquiries. It does not actively monitor what drivers are doing in real time or use GPS data to issue those drivers instructions.

In conclusion, in the absence of control (or controlling factors), and where it is shown that the driver is freely engaging in his or her own independent business, it is likely that the company will prevail if a driver files a claim – and that is true whether the claim is one for Unemployment Insurance benefits or an earnings-based claim such as one for overtime compensation. Congratulations to Juno on these important decisions!

Article by Kenneth R. Tuch

Kenneth R. Tuch is a partner with Pike, Tuch & Cohen, LLP, a Bellmore, NY-based law firm.

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