Opinion ID: 4519636
Heading Depth: 1
Heading Rank: 2

Heading: Postmates’s Business Model

Text: Postmates describes itself as “a company that created and operates a web-based and mobile Platform” which “facilitates a marketplace of deliveries from local businesses through a network of freelance Delivery Providers.” Notwithstanding this attempt to distinguish itself from other delivery services, the record makes clear that Postmates is in the business of making timely deliveries and uses technology to atomize this service. Postmates does not “match” an individual who can then negotiate in their own interests the best way to meet a client’s needs. Postmates’ “marketplace” is illusory as Postmates’ - 14 - - 15 - No. 13 business model depends on unskilled workers who have no ability to work as independent delivery persons and develop a client base while in Postmates’ employ. To be precise, Postmates created an algorithm that permits an individual to place an online delivery order. The request is made on the Platform and then Postmates finds a person from its pool of hired workers to make the delivery. Delivery persons—called “couriers”—access delivery assignments through the Platform, i.e., the Postmates app. Postmates does a criminal background check on couriers and trains them on how to use the app. Couriers must sign an “Independent Contractor Acknowledgement Agreement.” Although couriers may use their preferred means of transportation to conduct their deliveries, they must give Postmates advance notice of their choice. Couriers log into the app at will, and may accept or decline a posted delivery assignment, but they do not receive details about the nature of the assignment in advance of acceptance. Postmates retains the right to unilaterally terminate couriers without notice, such as for poor customer ratings or other poor performance. As I discuss below, Postmates’ business model depends on a delivery staff of “couriers” who are employees, not independent contractors. III. Restatement of Employment Law Applied to Postmates “Couriers” do not have an exclusive employment contract with Postmates, but being able to work simultaneously for another employer does not make a courier an independent businessperson. Couriers cannot build a client-base through their business savvy; apart from the moment of delivery, customer contact is through Postmates, and customers do not choose a delivery person. Nor does the work lend itself to the “exercise[] of entrepreneurial - 15 - - 16 - No. 13 control over important business decisions” (Restatement of Employment Law § 1.01 [b]). Indeed, the model depends on a courier not providing the same services as an independent businessperson. To illustrate the point, we need only consider what the parties present as a typical Postmates delivery assignment: the request to pick up a burrito bowl from a store and deliver it to the customer’s home. Postmates informs couriers of the pickup location for this delivery request through the app, and once a courier accepts the assignment, Postmates forwards the details. The courier is then tracked by both Postmates and the customer. At no time during the course of this delivery does the courier make important business decisions that would serve his entrepreneurial interests. The point is to get the delivery done and get paid by Postmates. There is no value in an independent relationship with any one customer since it will not lead to economically beneficial future business. You simply cannot individually deliver enough of those types of orders to make a business out of it.6 During Vega’s term as a courier for Postmates, he accepted approximately half of the assignments he was offered. According to his written agreement with the company, he 6 The record shows that Postmates pays its couriers 80% of the fee it charges its customers, which varies based on the distance that the courier travels. According to Postmates’s website, the fee varies from $0.99 to $9.99 per delivery (see Postmates, How do fees work?, available at https://support.postmates.com/buyer/articles/360032280952-article-How-dofees-work-#:~:text=). Thus, assuming an average delivery fee of $5, a courier would make $4 per delivery. To make the New York City minimum wage of $15 per hour over a 40hour work week (see Labor Law § 652), a courier would have to deliver 150 food orders per week over those 40 hours. Even if the courier makes the maximum of $8 per delivery every single time—an unrealistic prospect—the courier would have to make 75 deliveries per week. Setting aside the sizeable costs of healthcare and other benefits, which Postmates couriers must provide for themselves, it is obvious that these couriers cannot create an independent business out of delivering food orders or other similar items for Postmates. - 16 - - 17 - No. 13 carried his assigned deliveries on foot. He was involuntarily terminated from this role based, according to Postmates, on negative customer feedback related to his failure to deliver one or more of the items assigned to him. He was not hired as an independent contractor, and Postmates failed to provide evidence of how Vega was able to act as an entrepreneur in the course of delivering to Postmates customers. Put another way, the record evidence showed that Vega and other similarly situated couriers “can affect their remuneration or other economic interest only by working harder or more skillfully on [Postmates’] behalf; they are not entrepreneurs operating as independent businesspersons” (Restatement of Employment Law § 1.01, Comment f). The fact is that Postmates benefits from the labor of unskilled workers and persons of low income—both vulnerable to employer exploitation, as well as misclassification under the statute. In 2015, when Vega worked for Postmates, nearly three million New Yorkers, or 15.4% of the population, lived below the poverty line; nationally, fully 14.7% of persons in the United States lived in poverty (see United States Census Bureau, Poverty: 2014 and 2015, at 3 [2016]). Among individuals over 25, those without four-year college degrees were far more likely to be in poverty and/or unemployed (see United States Census Bureau, Income and Poverty in the United States: 2015, at 13 [2016] [poverty levels declined from 28.9% for individuals without high school degrees to 5% for those with fouryear degrees]; United States Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey: 2015 Annual Averages – Household Data – Table 7: Employment status of the civilian noninstitutional population 25 years and over by educational attainment, sex, race, and Hispanic or Latino ethnicity [2015] [unemployment - 17 - - 18 - No. 13 levels declined from 8% for individuals without high school degrees to 2.6% for those with four-year degrees]). The majority of workers in the app-enabled gig economy come from this economically vulnerable demographic (see United States Bureau of Labor Statistics, Electronically mediated work: new questions in the Contingent Worker Supplement 23 [Sept 2018], https://www.bls.gov/opub/mlr/2018/article/pdf/electronically-mediatedwork-new-questions-in-the-contingent-worker-supplement.pdf; see also dissenting op at 23 n 11). Although the Unemployment Insurance Law was passed decades before the digital age, today’s app-enabled gig worker is subject to the same devastating financial “insecurity” faced by prior generations of unemployed wage earners and which initially motivated legislators to act (see Labor Law § 501). IV. Substantial Evidence Supports the Board’s Determination The Unemployment Insurance Appeals Board’s determination that claimant Vega was Postmates’s employee during his tenure as a courier is supported by substantial record evidence. I reach that conclusion by application of the Restatement of Employment Law, which considers the extent to which an employer prevents worker entrepreneurialism and the worker’s exercise of entrepreneurial control over important business decisions. The Appellate Division should be reversed and the Board’s decision reinstated. - 18 - Matter of Vega (Postmates) No. 13 WILSON, J. (dissenting): The majority’s opinion suffers from two independent defects. The first is a failure to examine the record to determine whether the findings of the Commissioner of Labor were supported by substantial evidence. Many of those findings were so lacking in support as to appear to have been cut and pasted from the decision in some other matter, or from a form list of all the possible factors that might warrant the conclusion that someone was an -1- -2- No. 13 employee. Under those circumstances, reversal is required. The second is a failure to recognize that the realities of the contemporary working world have outpaced our jurisprudence. The multitude of factors identified in our caselaw as pertinent to determining whether a claimant is an employee or independent contractor – reflective of a time when employees received a gold watch upon retiring from the sole company at which they spent their entire careers – coupled with our deferential standard of review, has left only two undesirable paths open: either we adhere to the caselaw and standard of review, leaving all agency decisions unreviewable, or we make haphazard reversals without explanation, based on an ad hoc test we do not articulate because it defies explanation. We have chosen the latter approach, which has nothing to recommend it except that it is marginally better than the former.