Matter of Yoga Vida NYC, Inc. v. Commissioner of Labor

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This memorandum is uncorrected and subject to revision before

publication in the New York Reports.

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No. 130

In the Matter of Yoga Vida NYC,

Inc.,

Appellant.

Commissioner of Labor,

Respondent.

Elizabeth A. Harlan, for appellant.

Valerie Figueredo, for respondent.

Legal Aid Society, amicus curiae.

MEMORANDUM:

The order of the Appellate Division should be reversed,

with costs, and the matter remitted to that court with directions

to remand to respondent for further proceedings in accordance

with this memorandum.

Yoga Vida NYC, Inc. operates a yoga studio in

Manhattan. It offers classes taught by both staff instructors

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and non-staff instructors, and classifies the latter as

independent contractors. In May 2010, the Commissioner of Labor

issued a determination that Yoga Vida was liable for additional

unemployment contributions, effective October 1, 2009, based on

its finding that the non-staff instructors are employees. Yoga

Vida disputed that determination. A hearing was held before an

Administrative Law Judge (ALJ), who sustained Yoga Vida's

objection, concluded that the non-staff instructors are

independent contractors and overruled the determination. The

Commissioner appealed the ALJ's decision to the Unemployment

Insurance Appeal Board. The Board overruled Yoga Vida's

objection, reversed the decision of the ALJ, and sustained the

Commissioner's initial determination that Yoga Vida is liable for

additional unemployment contributions. Yoga Vida appealed to the

Appellate Division, which affirmed the determination of the

Appeal Board, holding that "[o]verall, despite the existence of

evidence that could result in a contrary result, the record

contains substantial evidence to support the Board's decision

that Yoga Vida had sufficient control over the instructors' work,

thereby allowing for a finding of an employer-employee

relationship" (119 AD3d 1314, 1315 [3d Dept 2014]).

"[S]ubstantial evidence consists of proof within the

whole record of such quality and quantity as to generate

conviction in and persuade a fair and detached fact finder that,

from that proof as a premise, a conclusion of ultimate fact may

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be extracted reasonably -- probatively and logically" (300

Gramatan Ave. Assoc. v State of Div. of Human Rights, 45 NY2d

176, 181 [1978]). Here, because the record as a whole does not

demonstrate "that the employer exercises control over the results

produced and the means used to achieve the results" (Matter of

Hertz Corp. [Commissioner of Labor], 2 NY3d 733, 735 [2004]

[internal citation omitted]), the Board's determination that the

company exercised sufficient direction, supervision and control

over the instructors to demonstrate an employment relationship is

unsupported by substantial evidence.

The non-staff instructors make their own schedules and

choose how they are paid (either hourly or on a percentage

basis). Unlike staff instructors, who are paid regardless of

whether anyone attends a class, the non-staff instructors are

paid only if a certain number of students attend their classes.

Additionally, in contrast to the staff instructors, who cannot

work for competitor studios within certain geographical areas,

the studio does not place any restrictions on where the non-staff

teachers can teach, and the instructors are free to inform Yoga

Vida students of classes they will teach at other locations so

the students can follow them to another studio. Furthermore,

only staff instructors, as distinct from non-staff instructors,

are required to attend meetings or receive training.

The proof of incidental control relied upon by the

Board, including that Yoga Vida inquired if the instructors had

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proper licenses, published the master schedule on its web site,

and provided the space for the classes, does not support the

conclusion that the instructors are employees. Similarly, in

this context, the evidence cited by the dissent, including that

Yoga Vida generally determines what fee is charged and collects

the fee directly from the students, and provides a substitute

instructor if the non-staff instructor is unable to teach a class

and cannot find a substitute, does not supply sufficient indicia

of control over the instructors. Furthermore, that Yoga Vida

received feedback about the instructors from the students does

not support the Board's conclusion. "The requirement that the

work be done properly 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 [internal

citation and quotation marks omitted]).

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Matter of Yoga Vida, NYC, Inc. v Commissioner of Labor of the

State of New York

No. 130

FAHEY, J. (dissenting):

I disagree with the majority's conclusion that the

determination of the Unemployment Insurance Appeal Board (the

Board) is not supported by substantial evidence. Whether an

employer-employee relationship exists "necessarily is a question

of fact" (Matter of Villa Maria Inst. of Music [Ross], 54 NY2d

691, 692 [1981]; see Matter of Di Martino [Buffalo Courier

Express Co. -- Ross], 59 NY2d 638, 641 [1983]). The Board must

determine whether the employer exercised control over the results

produced or the means used to achieve the results, with control

over the means being more important (see Matter of Empire State

Towing & Recovery Assn., Inc. [Commissioner of Labor], 15 NY3d

433, 437 [2010]). Nevertheless, "no one factor is determinative"

(Matter of Concourse Ophthalmology Assoc. [Roberts], 60 NY2d 734,

736 [1983]). We have stated that "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

conclusion" (id. [emphasis added]; see Matter of MNORX, Inc.

[Ross], 46 NY2d 985, 986 [1979]).

The majority relies on the evidence in the record

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supporting a determination that Yoga Vida's non-staff yoga

instructors were independent contractors in concluding that the

substantial evidence standard was not met (see majority op at 3).

Yet the majority ignores the evidence in the record that does

support the Board's determination that the non-staff instructors

were employees. For example, there is evidence in the record

that Yoga Vida generally recruits its clients, determines what

fee to charge for its classes, and collects that fee directly

from the students attending the classes. Once Yoga Vida

determines the class schedule and posts that schedule on its

website, the non-staff yoga instructors are not free to

unilaterally alter the time or length of the class, the type of

class taught, or the difficulty level, and it is Yoga Vida that

sets which classes will be taught and when. The non-staff

instructors are responsible for finding a suitable substitute

instructor if they are unable to teach their scheduled class, and

if the non-staff instructor cannot find a suitable replacement,

Yoga Vida will provide its own substitute. Non-staff instructors

are required to notify Yoga Vida of any substitution so that it

can update its schedule, and Yoga Vida considers whether a non-

staff instructor frequently has a substitute teach his or her

class in determining whether to continue its relationship with

that instructor. Furthermore, although non-staff instructors are

free to tell their students about other locations at which they

teach, Yoga Vida considers whether a non-staff instructor has

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advertised for a class directly conflicting with a Yoga Vida

class in determining whether to continue its relationship with

that instructor.

In summary, the majority has examined the evidence

before the Board and concluded that the evidence weighs more

heavily in favor of a conclusion that the non-staff instructors

are independent contractors. It is the role of the Board,

however, and not this Court, to weigh the factual evidence and

arrive at a conclusion (see Villa Maria Inst. of Music, 54 NY2d

at 693; MNORX, Inc., 46 NY2d at 986). If the evidence

"reasonably supports the [B]oard's choice, we may not interpose

our judgment to reach a contrary conclusion" (MNORX, Inc., 46

NY2d at 986). We have described substantial evidence as "[m]ore

than seeming or imaginary" but "less than a preponderance of the

evidence" (300 Gramatan Ave. Assoc. v State Div. of Human Rights,

45 NY2d 176, 180 [1978]). We have further stated that a

"practical test" for determining whether substantial evidence

exists is to "measur[e] the evidence against the standard of

sufficiency such as to require a court to submit it as a question

of fact to a jury" (id. at 181).

Here, the evidence reasonably supports the Board's

conclusion that the non-staff instructors are Yoga Vida's

employees, "even though there is evidence in the record that

would have supported a contrary conclusion" (Concourse

Ophthalmology Assoc., 60 NY2d at 736). In interposing its own

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judgment for that of the Board, the majority has disregarded the

substantial evidence standard of review and erroneously denied

the non-staff instructors employment benefits to which the Board

determined they were entitled. I respectfully dissent.

* * * * * * * * * * * * * * * * *

Order reversed, with costs, and matter remitted to the Appellate

Division, Third Department, with directions to remand to

respondent Commissioner of Labor for further proceedings in

accordance with the memorandum herein. Chief Judge DiFiore and

Judges Pigott, Abdus-Salaam and Garcia concur. Judge Fahey

dissents and votes to affirm in an opinion in which Judge Rivera

concurs. Judge Stein took no part.

Decided October 25, 2016

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