In re Claim of Jan Werner, 87 N.Y.2d 693 (1996)

Incidental control over the results produced by a worker, without further evidence of control over the means employed to achieve those results, does not constitute substantial evidence of an employer-employee relationship for unemployment insurance purposes.

Summary

This case addresses the distinction between an employee and an independent contractor in the context of unemployment insurance benefits. Jan Werner, a marketing representative for Hertz Corporation, was denied unemployment benefits by the Unemployment Insurance Appeal Board, which determined she was an employee, not an independent contractor. The Court of Appeals reversed, holding that Hertz’s limited control over Werner’s work (specifying products and presentation style) did not establish sufficient control over the *means* of achieving results to qualify her as an employee. The court emphasized that incidental control over results doesn’t equate to control over the methods used to achieve those results. The matter was remitted for further proceedings consistent with the determination that Werner was an independent contractor.

Facts

Jan Werner worked for STARS (Special Travel Agency Representative Service Network), a marketing organization for Hertz Corporation. She visited travel agencies to promote Hertz’s products by distributing materials and making presentations. Werner had autonomy in choosing which agencies to visit and when, within her assigned territory. She was paid per visit and wasn’t required to attend meetings. She also had the freedom to sell non-competing products. Her contract with Hertz identified her as an independent contractor, and Hertz reported her income on a 1099 form.

Procedural History

The Unemployment Insurance Appeal Board determined that Werner was a Hertz employee and thus eligible for unemployment insurance benefits. The Appellate Division affirmed. The New York Court of Appeals reversed the Appellate Division’s order, remitting the case with instructions to remand to the respondent for proceedings consistent with its memorandum decision.

Issue(s)

Whether substantial evidence exists to support the Unemployment Insurance Appeal Board’s determination that the claimant, Jan Werner, was a Hertz employee for the purposes of receiving unemployment insurance benefits.

Holding

No, because Hertz’s control over Werner was incidental and focused on the results, not the means by which she achieved those results, which is insufficient to establish an employer-employee relationship.

Court’s Reasoning

The Court of Appeals determined that the key factor in distinguishing an employee from an independent contractor is the level of control exercised by the employer. An employer-employee relationship exists only when the employer controls the results produced *and* the means used to achieve those results. The Court cited Matter of 12 Cornelia St., 56 NY2d 895, 897 (1982). The court found that Hertz’s actions, such as providing instructions on what to wear, which products to promote, and how to make a presentation, were not indicative of control over the *means* of Werner’s work. The Court quoted Matter of Werner, 210 AD2d 526, 528 (3d Dept 1994), stating: “The requirement that the work be done properly is a condition just as readily required of an independent contractor as of an employee and not conclusive as to either.” The court emphasized that incidental control over the results produced, without further evidence of control over the means employed to achieve the results, is insufficient to establish an employer-employee relationship, citing Matter of Ted Is Back Corp., 64 NY2d 725, 726 (1984). The court effectively clarified that specifying desired outcomes does not transform an independent contractor into an employee.