A publishing company does not have to provide unemployment insurance contributions to journalist and blogger Greg Mitchell. That was the decision from the Supreme Court, Appellate Division, Third Department of the State of New York. The ruling overturns a decision by the New York Department of Labor which had initially ruled that the company must make the contributions.
The case involved Gregory Mitchell, a freelance writer, who entered into a contract in 2010 with The Nation to author regular blog posts for the company’s website. Like Forbes, The Nation publishes digital content on its website as well as a print magazine.
In the contract, Mitchell was identified as a freelance writer. According to the terms of the contract, in return for writing regular blog posts, Mitchell was to be paid a “freelance payment” in monthly installments. In addition, Mitchell was paid separately for any work published in the company’s print magazine. The contract was an annual contract and was to be renewed each year.
Mitchell wrote for The Nation for a number of years. However, in 2014, The Nation chose not to renew the contract. In response, Mitchell applied for unemployment insurance benefits. In the state of New York, you may file a claim for benefits during your first week of total or partial unemployment. Casual workers and part-time workers may still be eligible for benefits, but independent contractors are considered “excluded employment” (pamphlet downloads as a pdf).
In September of 2014, the New York State Department of Labor issued an initial determination that Mitchell was, in fact, an employee at The Nation and therefore eligible for unemployment compensation. The Nation objected to the finding and requested a hearing.
At the hearing, Mitchell and employees and management of The Nation offer testimony. After a hearing, the Administrative Law Judge (ALJ) agreed with the initial determination, prompting The Nation to appeal to the state Unemployment Insurance Appeal Board. The Board upheld the ALJ’s findings and the matter eventually advanced to the appellate court.
The appellate court noted in its opinion that “case law governing the existence of an employment relationship often is more easily stated than applied.” That’s because there is no single issue that you can look to; the question is one of facts and circumstances. That said, the courts – and the Internal Revenue Service (IRS) – consider a number of factors when determining whether a worker is an employee or an independent contractor.
Specifically, when examining the status of a worker, the IRS tends to focus on three categories of factors:
1. Behavioral Control. Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial Control. Are the business aspects of the worker’s job controlled by the payer?
3. Type of Relationship. Are there written contracts or employee-type benefits? Will the relationship continue and is the work performed a key aspect of the business?
(You can read more about specific factors to consider here.)
Typically, the criteria considered by the courts and the IRS boil down to one central truth: the more likely the terms of the employment are controlled by an employer, the more likely it is that a worker is an employee.
Distinguishing independent contractors from employees can be confusing but is important because it can affect pay, overtime, benefits and more. That’s the issue here. According to New York law, the services of excluded employees – like independent contractors – are not covered under the Unemployment Insurance (UI) Law. That means that those employees are not entitled to UI benefits.
When the appellate court examined the factors to be considered, it decided that the Board’s decision in the Mitchell case was not supported by the evidence. Specifically, while the Board found that Mitchell identified himself as a writer for The Nation, was reimbursed for certain expenses, was required to use The Nation’s software to post his blog and was barred from publishing the same content with competitors – all factors that would support a finding that he was an employee – there were other factors that were more compelling in support of a finding that he was an independent contractor. For example, each year, Mitchell was issued a form 1099 which he used to file his taxes as self-employed. He set his own hours and worked from home (he was, according to testimony, not allowed to work at The Nation offices). Additionally, he could go on vacation at his leisure, and if he chose not to post at all, there were no adverse consequences. He also didn’t receive the same benefits, including fringe benefits, as The Nation’s staff writers.
With respect to his work, Mitchell created and developed his own stories, he did not have a supervisor who told him what or how to write, and he retained nearly immediate ownership of his content (he could cross-post materials on other sites after just 48 hours). Supporting the idea that he exercised a great deal of independence, it was noted that during the time that Mitchell wrote for The Nation, he published eight books and blogged for other sites like The Huffington Post.
That arrangement sounds pretty familiar to me. For years, I was an independent contractor, part of what my friend and fellow writer, Jen A. Miller, refers to as the “freelance mafia.” While the common view of a freelancer is that he or she takes on a number of different projects, it’s not unusual for a freelancer to have a “regular” gig that consumes most of his or her time. It can be a fair question whether the regular gig constitutes actual employment and that’s when the control factors matter.
In this particular case, the court found that there was a lack of direct control from The Nation over Mitchell’s activities. That meant, the court ruled, that the evidence did not support the Board’s decisions that he was an employee. As a result, the court ordered that the Board’s rulings are reversed, and the matter will go back to the Unemployment Insurance Appeal Board “for further proceedings not inconsistent with this Court’s decision.”
The Association of Magazine Media, a magazine trade group, had hoped the court would reach that outcome. The Association had filed an amicus curiae brief in the matter. Amicus curiae is Latin (because, lawyers) for “friend of the court” and applies to a person or entity who is not formally a party in a case but feels that the court’s decision could have a significant effect on its interest (you see this often at the Supreme Court level). In its brief supporting The Nation, the Association wrote that finding that Mitchell was an employee would be “counter to the widespread and historical industry practice of using independent contractors to provide content and other services.”
Consistency is important when it comes to the treatment of employees. Daniel Silverman, of the Brooklyn-based Law Office of Daniel Silverman, LLP, who represented The Nation in the appeal, said “This case takes a major step in clarifying how rules developed to deal with traditional employment relationships apply to the rapidly changing world of modern journalism and its reliance on bloggers and other more casual employment relationships.”
A request for comment from Mitchell’s attorney was not returned.
