Independent Contractor or Employee? Even the Courts Have a Hard Time Deciding

Stephanie Rodin - Independent Contractor or Employee? Even the Courts Have a Hard Time Deciding

There was a recent case with respect to a Manhattan yoga studio, which was appealed four times, to determine whether the non-staff instructors were actually employees rather than independent contractors. The matter was In Re Yoga Vida NYC, Inc (Commissioner of Labor), 28 N.Y.3d 1013 (2016).

When the case was first brought, the Commissioner of Labor determined the instructors were employees, and the yoga studio received a penalty for the back-taxes that weren’t paid on their behalf. The yoga studio then appealed the decision, which was subsequently reversed by an Administrative Law Judge. In Round #3, the Unemployment Insurance Appeal Board reversed the finding of the Judge, determining that the instructors were indeed employees. The Appellate Division affirmed the finding, and it was only when the case was in front of the Court of Appeals that it was deemed the instructors were indeed independent contractors.

The fact that the case had to go through four different appeals from the original decision shows that the concept of independent contractors versus employees is very problematic, and not an easy determination to make.

What this court specifically centered on was how much control the studio had over these non-staff instructors:

  • They came in on their own schedule.
  • They taught classes at the studio, unless there were not enough attendees.
  • They were paid either a percentage or per class.
  • They never went to any instructor meetings for the studio.
  • There were never any withholdings.
  • Although they were on the studio website, the instructors were never actually part of the studio.

In the end, the case came down to the fact that the instructors were not being controlled in the sense of what they were teaching. Non-staff instructors made their own schedules and chose how to be paid, while staff instructors were paid regardless of the number of attendees. There were no restrictions on when non-staff instructors could teach, while staff instructors had employment restrictions. And non-staff instructors were not required to attend meetings or receive training.

Overall, the court concentrated on the specific facts of this case to determine what these instructors were allowed, and not allowed, to do, or what they chose to do. It is critical to understand what control the employer has over the work/services being performed to determine whether that individual is an independent contractor or an employee.

In this matter, the very particular facts came into play to determine the role of the individual yoga instructors. It is why it is pertinent that when drafting independent contractor agreements, it is specific to your practice and situation. The contract should be based on such things as what type of services are being rendered, what control the office has over the individual, how the individual is getting paid, what benefits, if any, are being received, and the type of office they are working out of.

As a whole, the independent contractor is to be looked at as a completely separate business that is being hired for a particular reason to come into another practice. Read more about independent contractors in my previous article here.

Consult an attorney if you need help writing contracts for those who work for your business, or if you are an independent contractor who thinks they may be misclassified by your client/employer.

Stephanie J. Rodin, Esq.Stephanie J. Rodin, Esq.
Rodin Legal, P.C.
Email: info@rodinlegal.com
Tel: (917) 345-8972
Fax: (917) 591-4428

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