(Bloomberg) – Postmates Inc.’s couriers aren’t employees, a New York state appeals court ruled in a decision that will fuel debate about the status of workers in the gig economy.
The appeals court panel in a 3-2 decision on Thursday said a courier fired by Postmates isn’t entitled to unemployment insurance benefits. The order reverses a state Unemployment Insurance Appeal Board finding that the San Francisco food-delivery startup is an employer liable for unemployment insurance contributions on money paid to its couriers.
The ruling follows a similar February decision by a federal court judge in California who concluded drivers for competing food delivery company GrubHub Inc. are independent contractors and not employees.
The disputes are pieces of a bigger, long-running court battle against gig-economy companies, including Uber Technologies Inc., whose business models are built on pairing customers with products and services through apps. They avoid the costs of traditional employment, such as having to pay minimum wage, overtime, and workers’ compensation.
The New York decision is at odds with a California Supreme Court ruling in April that puts the onus on companies to prove workers are independent contractors, not employees.
The question in the Postmates case turned, as it does in many states and court conflicts, on how much control the company exerts over its workers. The panel ruled the relationship between Postmates and the courier lacked the requisite “supervision, direction and control necessary to establish an employer-employee relationship.”
Postmates couriers aren’t required to report to any supervisor, and are free to work as much or as little as they want with no set work schedules, according to the majority ruling.
“In fact, once logged on to the platform, a courier may decline to do anything,” the panel ruled.
The case is Vega v. Postmates, 525233, New York Supreme Court Appellate Division, Third Judicial Department.