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The Employer-Employee Relationship Defense in New York

Last week, as part of our monthly webinar series, we discussed the Employer-Employee Relationship Defense. Among other concepts in that Webinar, we discussed the requirement to timely file all procedural documents, as well as the tests that determine an independent contractor versus an employee. This past week, the Administrative Review Division (ARD) filed two Board Panel Decisions on these topics.

New Decisions.

In Matter of Ara Piramzadian, 2016 NY Wrk Comp 079 3152, the Law Judge had found the claimant to be an independent contractor of the employer. In support of that finding, the Judge appeared to credit testimony from the employer, over testimony of the claimant. However, when the claimant appealed, the ARD ruled that the insurance carrier’s failure to file a notice of controversy within twenty-five days of being indexed resulted in a waiver of the employer-employee relationship defense. This ruling emphasizes the notion that defenses can only be presented if the right to raise those defenses are properly maintained.

In Matter of Times Union, 2016 NY Wrk Comp 120 3659, both the claimant and insurance carrier produced extensive lay witness testimony on whether the claimant was an independent contractor. The testimony revealed that the claimant was paid based on his output; that he drove his personal vehicle while working and provided his own materials to use for work; entered into an “independent contractor” services agreement wherein he was permitted to work for other entities; and had his own independent contractor insurance. However, in affirming the Law Judge’s decision holding the claimant to be an employee, the ARD cited case law that stood for the proposition that “no one factor is dispositive,” including a contract that designates an individual as an independent contractor. See Matter of Brown v. City of Rome, 66 AD3d 1092 [2009]. Here, the fact that the employer controlled the work schedule, the manner of work, and had the right to discharge the individual at any time, was advanced as support for holding the claimant out as an employee. While this holding is troublesome for insurance carriers, it is helpful to see the strength of the “right to control” factor in determining the applicability of the defense. If the denial and subsequent investigation into the right to control the independent contractor leans in favor of the claimant, we must aggressively pursue all other applicable defenses to compensability.

For any further questions on this defense as well as all other issues pertaining to New York Workers’ Compensation defense, please feel free to contact me via e-mail.

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