In the Matter of Empire State Towing and Recovery Association, Inc. / Commissioner of Labor
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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
----------------------------------------------------------------No. 160
In the Matter of Empire State
Towing and Recovery Association,
Inc.,
Appellant.
Commissioner of Labor,
Respondent.
Peter B. O'Connell, for appellant.
Richard O. Jackson, for respondent.
JONES, J.:
The issue before this Court is whether there is
substantial evidence in the record to support the Unemployment
Insurance Appeal Board's finding of an employer-employee
relationship.
We hold there is not.
Peter O'Connell maintains a law practice in Albany that
focuses on government relations and lobbying.
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Appellant Empire
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No.
State Towing and Recovery Association, Inc., an association that
represents members in the tow truck operating business, retained
O'Connell for legal and lobbying services.
In 1997, Empire State
Towing and O'Connell entered into a written agreement in which
O'Connell would perform administrative services as the executive
director, in addition to his legal and lobbying services.
Pursuant to the written agreement, O'Connell maintained
a telephone and computer database in the name of the association,
mailed dues and membership materials, mailed periodic financial
statements to board members, and coordinated publication of a
journal.
He also attended board meetings, maintained a bank
account, and had check writing authority up to $500.
For greater
monetary amounts, O'Connell had to submit documentation
accounting for the required amount and obtain the signature of
Empire State Towing's treasurer.
O'Connell performed all these
services from his own law office, was free to set his own
schedule, and was not working exclusively for the association.
In 2004, a part-time assistant was hired to help
O'Connell in his duties as executive director.
It is conceded
that the part-time assistant was an employee of the association.
In 2006, O'Connell relinquished his duties as executive director.
The Commissioner of Labor determined through an audit
of Empire State Towing, for the period of January 1, 2004 through
December 31, 2005, that O'Connell was its employee and assessed
$617.53 in additional unemployment insurance payments.
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Empire
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No.
State Towing disputed the finding on the ground that O'Connell
was an independent contractor, and a hearing was held before an
administrative law judge.
The administrative law judge sustained
the determination of the Commissioner on the basis that the
evidence showed an exercise of control by Empire State Towing
over O'Connell's duties as executive director.
An appeal was taken to the Unemployment Insurance
Appeal Board which affirmed the determination of the
administrative law judge.
The Appeal Board found that there was
"credible evidence" that the employer "exercised or reserved the
right to exercise sufficient supervision, direction, and/or
control to establish an employer-employee relationship."
Consequently, Empire State Towing filed a notice of appeal with
the Appellate Division.
The Appellate Division affirmed the prior
determinations on the ground that the Appeal Board's decision was
based on substantial evidence, specifically referring to the fact
that the association (1) furnished office space and equipment,
(2) reimbursed O'Connell's expenses, and (3) required O'Connell
to submit reports and attend meetings (62 AD3d 1129 [3d Dept
2009]).
This Court granted appellant's Empire State Towing's
motion for leave to appeal, and we now reverse.
Empire State Towing argues that O'Connell is an
independent contractor and that the earlier determinations have
incorrectly focused on his administrative duties and the end
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- 4 -
No.
results rather than on the exercise of control over the means
used to achieve those results.
The Commissioner contends that
there is substantial evidence of control in the record to support
the earlier findings, such as
approval for checks over $500.
the association's required
Furthermore, the Commissioner
asks this Court to apply the "overall control" test because
O'Connell enjoyed autonomy and discretion as executive director
of the association.
It is well-settled that,
"[w]hether an employment relationship exists
within the meaning of the unemployment
insurance law is a question of fact, no one
factor is determinative and the determination
of the appeal board, if supported by
substantial evidence on the record as a
whole, is beyond further judicial review even
though there is evidence in the record that
would have supported a contrary decision"
(Matter of Concourse Ophthalmology [Roberts], 60 NY2d 736 [1983];
Matter of King's Brass Ceremonial [Commissioner of Labor], 904
NYS2d 543 [3d Dept 2010]; Matter of Rosen [Commissioner of
Labor], 73 AD3d 1352 [3d Dept 2010]).
An employer-employee
relationship exists when the evidence shows that the employer
exercises control over the results produced or the means used to
achieve the results (see Matter of 12 Cornelia St. [Ross], 56
NY2d 895, 897 [1982]).
However, "[c]ontrol over the means is the
more important factor to be considered" (Matter of Ted Is Back
Corp. [Roberts], 64 NY2d 725, 726 [1984]; see Matter of Bedin
[Commissioner of Labor], 257 AD2d 809 [3d Dept 1999]).
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- 5 -
No.
"Incidental control over the results produced without further
evidence of control over the means employed to achieve the
results will not constitute substantial evidence of an employeremployee relationship" (Matter of Hertz Corp., 2 NY3d 733, 734
[2004]; Matter of Ted Is Back Corp., 64 NY2d 725 at 726; Matter
of Cromer [Sweeney], 248 AD2d 773 [3d Dept 1998]).
In some cases, this Court has applied the "overall
control" test where "substantial evidence of control over
important aspects of the services performed other than results or
means" is sufficient to establish an employer-employee
relationship (Matter of Concourse Ophthalmology Assoc., 60 NY2d
734 at 736).
This test is applicable to services where the
details of the work performed are difficult to control because of
considerations such as professional and ethical responsibilities
(see Matter of Salamanca Nursing Home, Inc. [Commissioner of
Labor], 68 NY2d 901 [1986]; Matter of Concourse Ophthalmology
Assoc., 60 NY2d 734).
This analysis has been typically applied
in the context of professionals such as physicians and attorneys
(see Matter of Concourse Ophthalmology Assoc., 60 NY2d 734 at
736; Matter of Salamanca Nursing Home, Inc., 68 NY2d 901; Matter
of Parisi [Commissioner of Labor], 54 AD3d 456 [3d Dept 2008];
Matter of Rosen, 73 AD3d 1352 ).
Here, under either test, substantial evidence does not
exist in the record to support the Unemployment Insurance Appeal
- 5 -
- 6 -
No.
Board's determination that O'Connell was an employee of the
association.
Although the record before us extensively details
O'Connell's duties, it lacks substantial evidence of any control
exercised by the association over O'Connell .
The requirement that the association's treasurer had to
approve and co-sign on checks for over $500 does not support a
finding that O'Connell was an employee.
The check approval
authority was a form of incidental control over results that is
"a necessarily wise business decision" (Matter of Ted Is Back
Corp., 64 NY2d at 725).
Moreover, the fact that O'Connell had to
submit periodic reports and attend meetings "is a condition just
as readily required of an independent contractor as of an
employee and not conclusive as to either" (Matter of Hertz Corp.,
2 NY3d at 735).
Accordingly, the order of the Appellate Division should
be reversed, with costs, and the matter remitted to the Appellate
Division, with directions that the matter be remanded to the
Unemployment Insurance Appeal Board for further proceedings in
accordance with this opinion.
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Order reversed, with costs, and matter remitted to the Appellate
Division, Third Department, with directions to remand to the
Unemployment Insurance Appeal Board for further proceedings in
accordance with the opinion herein. Opinion by Judge Jones.
Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith and
Pigott concur.
Decided October 26, 2010
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