New York Court Rules on Employee Misclassification Claim, Applying Different Standard than New Jersey Courts

New Jersey employment laws provide numerous protections for employees, including minimum wage, overtime, and prohibitions on discrimination, harassment, and retaliation. In order to qualify for the protections offered by New Jersey’s employment statutes, however, an individual must meet the legal definition of an “employee.” New Jersey uses an expansive definition of the term based on unemployment law. See Hargrove v. Sleepy’s, LLC, 106 A.3d 449 (N.J. 2015). A recent decision from a New York appellate court uses a narrower definition of “employee” in an unemployment claim brought by a “gig economy” worker. Matter of Vega, 2018 NY Slip Op. 4610 (App. Div., 3d Dept.).Incorrectly or falsely designating a worker as an independent contractor is commonly known as “employee misclassification.” The various employment statutes at the state and federal levels contribute to the problem by lacking a consistent and distinct definition of “employee.” One statute’s definition of the term might differ from another statute, or a statute may lack any useful definition. Courts often step in to provide definitions that could apply to certain types of claims, or all claims in which employee classification is an issue.

The ruling in Hargrove involved alleged violations of state wage laws by a company that employed the plaintiff and others as delivery drivers. The New Jersey Supreme Court ruled that courts should apply a three-part definition found in New Jersey’s unemployment laws. This definition states that an individual is an employee unless:  (1) they are “free from control or direction over the performance of” their job; (2) the job they perform is “either outside the usual course of the [employer’s] business, or it “is performed outside of all the [employer’s] places of business”; and (3) the individual works “in an independently established trade, occupation, profession or business.” N.J. Rev. Stat. § 43:21-19(i)(6).

The plaintiff in Vega worked as a delivery driver for a “gig economy” company. The job involves picking up food orders at restaurants, which have been placed by customers through a smartphone app, and delivering the orders to the customers. After the company terminated the plaintiff, he filed for unemployment benefits from the state. He did not allege any specific wrongdoing by the company but instead appealed a decision by an Administrative Law Judge (ALJ) finding that he had not been an “employee” for the purpose of state unemployment law. The state Unemployment Insurance Appeal Board (UIAB) reversed this decision, and the state appealed.

The New York Appellate Division reversed the UIAB’s ruling and reinstated the ALJ’s decision. The court used a much narrower definition of “employee” than that found in New Jersey law, finding that the plaintiff’s job “lack[ed] the requisite indicia of supervision, direction and control.” Vega, slip op. at 4. It noted that once delivery drivers pass a background check, they “are not thereafter required to report to any supervisor,” and they “retain the unfettered discretion as to whether to ever…actually work.” Id. at 3. Two justices dissented, noting that, among other factors distinguishing the case from precedents cited by the majority, the company handles all financial transactions and “bears liability for defective deliveries.” Id. at 6.

The Resnick Law Group’s employment attorneys represent workers in a variety of disputes over misclassification and other issues with their employers in New Jersey and New York. To schedule a confidential consultation with a member of our knowledgeable and experienced team, contact us today online, at 973-781-1204, or at 646-867-7997.

More Blog Posts:

Third Circuit Reinstates New Jersey Employment Misclassification Lawsuit, The New Jersey Employment Law Firm Blog, October 6, 2017

Proposed Law Would Protect Rights of Workers in the “Gig Economy”, The New Jersey Employment Law Firm Blog, October 13, 2016

The Distinction Between an “Employee” and an “Independent Contractor” is Critical in New Jersey Employment Law Claims, The New Jersey Employment Law Firm Blog, May 22, 2015


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