The New York State Court of Appeals (New York’s highest court) recently issued an informative decision concerning whether certain workers were properly classified as independent contractors as opposed to employees.  Unlike employees, independent contractors are not protected by anti-discrimination laws and are not guaranteed minimum wage, overtime compensation, unemployment insurance, and workers’ compensation.

 The case, In re Yoga Vida NYC, Inc., 2016 N.Y. LEXIS 3216 (Oct. 25, 2016), began after the New York Department of Labor (“DOL”) ruled that Yoga Vida, a yoga studio in New York, was liable for additional unemployment contributions because its non-staff instructors were misclassified as independent contractors when they were actually employees.  The Appellate Division thereafter affirmed the determination of the DOL.

 However, the Court of Appeals reversed and held that Yoga Vida’s non-staff yoga instructors were independent contractors and not employees because Yoga Vida did not exercise control “over the results produced and the means used to achieve the results.”  In making this determination, the Court found that Yoga Vida did not exercise sufficient control over the means used by its non-staff instructors to achieve the goal of providing yoga classes because the instructors: 

  • set their own hours and made their own schedules;
  • chose whether to be paid hourly or on a percentage of sales of the classes that they taught;
  • were paid only if a certain number of students attended their classes;
  • could work for competitor businesses and were free to inform their students about classes that they taught at other studios; and
  • were not required to attend meetings or receive training.

 The Court noted that while Yoga Vida did exercise some “incidental control,” such as determining whether the instructors had proper licenses, publishing a class schedule on its website, providing the space for the classes, and determining what fee would be charged to customers, this was insufficient to establish an employment relationship.  The Court also pointed out that 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.” 

 In sum, the more supervision, direction, and control that a business exerts over a worker, the more likely the worker will be an employee and not an independent contractor.  This decision serves to confirm and reiterate that factors such as a worker’s ability to set his or her own schedule, work for competitors, and choose the way he or she is paid can be very important when determining whether a worker is properly classified as an independent contractor.

 If you believe that your employer has misclassified you as an independent contractor, it’s smart to consult with a New York City employment attorney to learn about, and preserve, all your legal rights.

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