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Are Brand Employees Working Within a Retailer Eligible for Compensation Benefits from the Store?

It has become increasingly common for national brands to place their own employees within retail stores. Examples include technology companies providing in-store employees to major technology retailers and makeup and perfume brands supplying counter employees to department store retailers. Often times the person selling cosmetics behind the counter at a national department store is actually hired by, paid by, and trained by the cosmetic company and not the retailer. If that worker is injured, whether or not the brand employee will be found to be an employee for workers’ compensation purposes of the retail store will depend on the nature of the employment.

Finding Employment in General.

A common question before the New York Workers’ Compensation Board is whether an injured claimant is an employee or an independent contractor. The Board defines an “employee” differently than does the Federal government (for example, tax filing status is immaterial in a determination of employment.)

The Board considers the following factors in determining whether an injured claimant is an employee or was an independent contractor (and therefore not eligible for benefits):

1. Who has the right to control the claimant?

  • A person or organization controlling the manner in which the work is to be performed indicates that the task is being performed by an employee.
  • If the person doing the labor controls the time and manner in which the work is to be done this may indicate that the task is being done by an independent contractor.

Rule of thumb: If an individual is truly independent, the individual generally works under his/her own operating permit, contract or authority.

2. Whether the character of the work performed by the claimant was the same as the employer?

  • Work done consistent with the primary work performed by the hiring business indicates that the labor was done by an employee. Example: Someone paving a driveway for a driveway contractor is generally considered the employee of that paver.
  • Work done by a person that is different than the primary work of the hiring business may indicate the task is being performed by an independent contractor. Example: A plumber hired on a one-time basis to fix a broken pipe for a retail store owner is generally considered an independent contractor.

3. What Was The Method of Payment?

  • Employees tend to be paid wages on an hourly, daily. weekly, or monthly basis.
  • Employment is indicated if the hiring business withholds taxes and/or provides other employee benefits (Unemployment Insurance, health insurance, pensions, FICA, etc.) Whether the labor is paid using a W2 or 1099 Form for tax purposes does not matter in determining an employer/employee relationship for workers’ compensation purposes.
  • A business paying cash to an individual for services usually indicates that the individual is an employee.
  • Payment made for performance of the task as a whole may indicate the task is being done by an independent contractor.
  • 4. Who Furnished the Equipment and Materials for the job?

    • A business providing the equipment and/or materials used by people in performing the work tends to indicate an employer-employee relationship.

    5. Who has the right to Right to Hire/Fire at the worksite?

    • A business retaining the authority to hire and fire the individuals performing the work indicates an employee is performing the work.
    • An independent contractor retains a degree of control over the time when the work is to be accomplished and is not subject to be discharged by the hiring entity because of the method he chooses to use in performing the work. An independent contractor’s services may be terminated if the services rendered do not meet contractual requirements.

    All factors may be considered, and no one factor alone determines whether a person will be considered an employee under the WCL.

    Applying this to Brand Employees.

    In a recent case involving a skin care brand (Task Essential) providing in-store employees to do skin care and product demonstration within a Bloomingdales location, the claimant was found to be an employee of Task Essential and not Bloomingdales. Colamaio-Kohl v. Task Essential Corp., 157 A.D.3d 1103 (3d Dep’t 2018). The court found that the relevant factors in reaching this conclusion were the right to control the work, who set the work schedule, the method of payment, the furnishing of equipment, the right to fire, and the relative nature of the work.

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