New York Law Review

Tag: Employee vs. Independent Contractor

  • Matter of Goldstein, 62 N.Y.2d 936 (1984): Determining Employee vs. Independent Contractor Status for Unemployment Insurance

    Matter of Goldstein, 62 N.Y.2d 936 (1984)

    When services rendered require professional and ethical responsibilities that limit control over the service provider, the degree of control necessary to establish an employer-employee relationship for unemployment insurance purposes may be inferred from the nature of the work and the overall structure of the business.

    Summary

    This case addresses whether registered physical therapists engaged by a physical therapy corporation should be classified as employees or independent contractors for unemployment insurance purposes. The court affirmed the decision of the Unemployment Insurance Appeal Board, holding that the therapists were employees. The ruling emphasized the unique nature of professional services, which inherently limits the degree of control an employer can exert. The court found substantial evidence supporting the Board’s decision based on factors such as the corporation providing facilities and equipment, assigning patients, and paying a fixed weekly sum to the therapists, demonstrating sufficient control to establish an employer-employee relationship.

    Facts

    Myron Goldstein, a physical therapist, formed a professional corporation to handle an overflow of patients. The corporation engaged registered physical therapists who were allowed to treat their own patients in addition to those referred to Goldstein or the corporation. Clerical staff assigned referred patients to the individual therapists and billed all patients. The therapists received fees paid by their own patients. They also received a fixed weekly sum for treating patients referred to Goldstein or the corporation. The corporation provided the physical facilities, fixtures, and equipment, and paid for all maintenance expenses.

    Procedural History

    The Unemployment Insurance Appeal Board determined that the physical therapists were employees of Myron Goldstein’s corporation for the purposes of the Unemployment Insurance Law. This decision was appealed. The Appellate Division’s order affirmed the Board’s decision, and the case was appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Unemployment Insurance Appeal Board erred in determining that the registered physical therapists were employees of Myron Goldstein’s corporation, rather than independent contractors, for purposes of unemployment insurance benefits.

    Holding

    Yes, because given the nature of professional services rendered by physical therapists and the extent of control exerted by the corporation, there was substantial evidence to support the Board’s decision that the therapists were employees.

    Court’s Reasoning

    The Court of Appeals affirmed the lower court’s decision, emphasizing that the services of professionals, such as physical therapists, are inherently subject to different control mechanisms than other personal services, due to the professional and ethical responsibilities of the individuals. The court found that the corporation exercised sufficient control to establish an employer-employee relationship, even though direct control was limited by the therapists’ professional obligations. Key factors included the corporation providing the facilities, fixtures, and equipment, assigning patients to the therapists, and paying a fixed weekly sum. The court cited Matter of Concourse Ophthalmology Assoc. [Roberts], 60 NY2d 734, recognizing that professional services cannot be controlled in the same manner as other services. The court found the record supported the Appeal Board’s conclusion that the therapists’ status was that of employees for Unemployment Insurance Law purposes. This case highlights that in determining whether an individual is an employee or an independent contractor, courts will look at the totality of the circumstances, focusing on the degree of control the putative employer exerts, either directly or indirectly, particularly in situations involving professional services. The crucial aspect is that the control need not be as overt or direct as in other service contexts, but can be inferred from the operational structure and support provided to the professional.

  • Matter of Theodore Federici, M.D., P.C., 64 N.Y.2d 738 (1984): Determining Employment Status for Unemployment Insurance

    Matter of Theodore Federici, M.D., P.C., 64 N.Y.2d 738 (1984)

    Whether an employment relationship exists for unemployment insurance purposes is a factual determination based on various factors, and the Appeal Board’s decision, if supported by substantial evidence, is conclusive even if conflicting evidence exists.

    Summary

    This case addresses whether certain ophthalmologists, optometrists, and a medical photographer working for Dr. Federici’s medical practice should be classified as employees or independent contractors for unemployment insurance purposes. The Court of Appeals affirmed the Appellate Division’s decision, holding that substantial evidence supported the Unemployment Insurance Appeal Board’s determination that they were employees. The court reasoned that while the nature of their professions limited direct control over their work, other factors, such as the practice’s control over scheduling, fees, premises, equipment, billing, and record-keeping, established an employer-employee relationship.

    Facts

    Dr. Federici, a medical doctor, engaged ophthalmologists, optometrists, and a medical photographer to provide services at his practice. These professionals worked part-time, generally on a regular schedule. Patients treated were those of Dr. Federici. The practice’s receptionist scheduled appointments. Fees were primarily fixed by Dr. Federici, with occasional professional reductions. Services were rendered at Dr. Federici’s premises using his equipment and facilities. Dr. Federici’s staff handled billing, collections, patient records, and insurance/Medicare forms.

    Procedural History

    The Unemployment Insurance Appeal Board determined that the ophthalmologists, optometrists, and medical photographer were employees of Dr. Federici’s practice. Dr. Federici appealed this determination. The Appellate Division affirmed the Board’s decision. Dr. Federici then appealed to the New York Court of Appeals.

    Issue(s)

    Whether substantial evidence supports the Unemployment Insurance Appeal Board’s determination that the ophthalmologists, optometrists, and medical photographer were employees of Dr. Federici’s medical practice for unemployment insurance purposes, despite the limited control over their professional services.

    Holding

    Yes, because substantial evidence existed to support the Board’s determination that an employment relationship existed, considering factors beyond direct control over professional services, such as control over scheduling, fees, premises, equipment, billing, and record-keeping.

    Court’s Reasoning

    The Court of Appeals emphasized that determining the existence of an employment relationship is a factual question. No single factor is determinative. The Court stated that the Appeal Board’s determination must be upheld if supported by substantial evidence, even if there’s conflicting evidence. The court distinguished this case from those where control over results and means is the primary factor, noting that the professional services of ophthalmologists, optometrists, and medical photographers do not easily lend themselves to such direct control. The Court found substantial evidence of control over other aspects of the services provided. These included that the patients were Dr. Federici’s, the professionals worked regularly scheduled hours, appointments were made by Dr. Federici’s receptionist, fees were largely fixed by Dr. Federici, services were rendered on his premises with his equipment, and his staff handled billing, collections, and records. The court considered these factors sufficient to establish an employer-employee relationship rather than an independent contractor arrangement. The Court cited previous cases such as Matter of Villa Maria Inst. of Music [Ross] and Matter of Eastern Suffolk School of Music [Roberts] to support their conclusion. The court also quoted precedent noting that the determination of the appeal board, if supported by substantial evidence on the record as a whole, is beyond further judicial review.

  • Matter of Villa v. Allied Kitchen & Bath, Inc., 46 N.Y.2d 943 (1979): Determining Independent Contractor Status in Workers’ Compensation Claims

    Matter of Villa v. Allied Kitchen & Bath, Inc., 46 N.Y.2d 943 (1979)

    The determination of whether a worker is an employee or an independent contractor is a factual question for the Workers’ Compensation Board, and its decision will be upheld if supported by substantial evidence.

    Summary

    This case addresses whether the decedent, Villa, was an employee or an independent contractor of Allied Kitchen & Bath, Inc. at the time of his death, for the purposes of a workers’ compensation claim. The Court of Appeals held that this determination is a question of fact within the sole competence of the Workers’ Compensation Board. The Court found that the Board’s decision to deny the claim, based on evidence suggesting an independent contractor relationship, was supported by substantial evidence, even though conflicting evidence existed. The Court reversed the Appellate Division’s order and reinstated the Board’s original decision.

    Facts

    The decedent, Villa, was a kitchen cabinet installer. Allied Kitchen & Bath, Inc. asserted that Villa was an independent contractor. Allied’s field supervisor testified that he did not control Villa’s work or hours, only checking the quality. Villa submitted bills for his work and was paid with non-payroll checks without deductions. For years prior, Allied had used subcontractors for kitchen cabinet installations.

    Procedural History

    The Workers’ Compensation Board initially disallowed the claim, finding Villa was an independent contractor. The Appellate Division reversed this decision. The Court of Appeals then reviewed the Appellate Division’s order.

    Issue(s)

    Whether the Workers’ Compensation Board’s determination that the decedent was an independent contractor, rather than an employee, at the time of his death was supported by substantial evidence.

    Holding

    Yes, because the record contained substantial evidence supporting the Board’s finding that the decedent was an independent contractor, making the determination a factual question within the Board’s competence.

    Court’s Reasoning

    The Court of Appeals emphasized that the Workers’ Compensation Board is the primary fact-finder in workers’ compensation cases. The court noted the substantial evidence supporting the Board’s decision, including the field supervisor’s testimony regarding lack of control, the form of payment without payroll deductions, and Allied’s practice of using subcontractors. The court stated, “the requirement of the substantial evidence rule was met here, among other facts, by the appellant’s field supervisor’s testimony that he attempted no control of decedent’s work or hours, but merely checked on the quality of the work that had been commissioned; by introduction of the bill submitted by decedent for the work he had done and for which he had accepted payment in the form of a nonpayroll check without payroll deductions; and by proof that for some years before decedent’s death the appellant had operated its business under a reordered method by which it referred all kitchen cabinet installations to subcontractors.” Even though there was conflicting evidence from which different inferences could be drawn, it was the Board’s prerogative to weigh the evidence and determine which to credit. This highlights the limited scope of judicial review in such cases: the court will not substitute its judgment for the Board’s if the Board’s decision is supported by substantial evidence.