Claims Analyst Asserts He Was a Wrongfully Terminated Employee

Court Determines If He Was a Properly Terminated Independent Contractor

Henry Goldman moved for summary judgment on his claims against Riverso Associates, Inc. and its principal, Vincent Riverso, for unpaid wage supplements and statutory penalties under the Labor Law, and related relief under the parties’ contract. RAI and Riverso made a cross-motion for summary judgment dismissing the complaint.

Goldman began working for RAI and Riverso in July 2017. According to Goldman, he was hired as a Claims Analyst, whose duties included review of correspondence, project documents, project schedules, project estimates and costs, problems or delays, and the preparation of narratives describing any issues on the project. He stated that the job had formerly been performed by a salaried employee of RAI. After Goldman worked there for several months, the parties entered into a contract that was entitled “Agreement for Services,” which described Goldman’s services as “construction claims consulting, schedule analysis, estimating and project management.” The agreement provided for a term from November 1, 2017 through December 31, 2021, which could be terminated by either party upon two weeks’ written notice. The agreement also provided that Goldman was to be compensated at a rate of $175.00 per hour, and that he would invoice RAI on a bi-weekly basis for actual hours worked.

The agreement also included an express statement that: “Nothing in this agreement will be construed to cause an employer-employee relationship between RAI and Goldman. Goldman is an independent contractor and agrees to waive any claim to RAI employee benefits.” And also contained a non-compete provision that Goldman would not “consult for, contract with, or become the employee of any of RAI’s present or former clients” during the period of the agreement and for three years after its termination.

On or about August 21, 2018, Riverso allegedly terminated Goldman’s position with RAI pursuant to an in-person conversation; no written notice was given. Litigation ensued in which Goldman contended that he was an employee rather than an independent contractor, and that, as such, RAI and Riverso were liable to him for their failure to pay him wage supplements, failure to provide a wage notice as required by Labor Law § 195(1), and failure to provide wage statements compliant with Labor Law § 195(3). In addition, Goldman brought causes of action for breach of contract and unjust enrichment.

RAI and Riverso filed and answer that contained five affirmative defenses: failure to state a cause of action, equitable estoppel, unclean hands, waiver, and the statutes of limitations.

In moving for summary judgment on his claims, Goldman asserted that his submissions established as a matter of law that he was misclassified as an independent contractor rather than an employee, pursuant to the criteria set forth by the Court of Appeals in 2003 in Bynog v Cipriani. Goldman relied on his own affidavit and deposition transcript; Riverso’s deposition testimony in which he described his supervisory authority over Goldman;  time sheet summaries by Goldman; proof that he received a holiday bonus in 2017; proof that he requested and received approval for a vacation in July 2018; his submissions to the New York Department of Labor’s Unemployment Insurance Division for unemployment benefits, and the agency’s determination that Goldman was an employee and therefore entitled to such benefits.

Goldman asserted that Riverso expected him to work a fixed schedule at RAI’s premises, generally eight hours per day, Monday through Friday, amounting to between 36 and 40 hours per week, until about August 10, 2018, when he was instructed to work no more than 32 hours per week. He also asserted that Riverso restricted his ability to obtain other employment, including through the non-compete clause in the parties’ agreement, and that the $2,000 holiday bonus he received in 2017 constituted a fringe benefit. In addition, Goldman claimed that Riverso represented to clients that he worked for RAI, and that he was provided with office space, equipment, a company email address and a company business card.

Based on his submissions, Goldman argued that he established his status as an employee, entitled to wage supplements and to the remedies and penalties afforded by the Labor Law for failure to provide a proper wage notice compliant with Labor Law § 195(1) and wage statements in compliance with Labor Law § 195(3). Goldman further contended that he established that RAI breached its agreement with him by failing to give him written notice of his termination, and that he was entitled to damages arising out of that breach, calculated as his weekly income through the full term of the agreement.

In opposition to Goldman’s motion and in support of their cross-motion, RAI and Riverso submitted evidentiary materials that they maintained establish that Goldman was an independent contractor. They relied on the recitals in the parties’ agreement that nothing in it would be construed to establish an employer-employee relationship, and that Goldman agreed to waive any claim to employee benefits. They observed that the contract’s non-compete provision merely prohibited him from working for RAI’s clients outside of his work for RAI, and did not prevent him from working for any non-client. They also relied upon the invoices Goldman submitted to RAI with the written heading “Hal Goldman Consulting and Expert Witness Services” or the printed heading “Henry Goldman Consulting and Expert Witness Services.”

The affidavit by Riverso stated that Goldman was given the option, and voluntarily decided to work as an independent contractor rather than an employee; he maintained a separate business address; maintained a flexible schedule and had the ability to work off-site if he so preferred; supplied some of his own equipment at his own expense, and absorbed his travel expenses; and that RAI did not provide Goldman with fringe benefits, and reported his compensation to the IRS on a 1099 form rather than a W-2 form, without making any payroll deductions. And observed that Goldman did not receive vacation pay, sick time, or health insurance, and that the holiday bonus was a common gift for businesses to give to nonemployee business contacts. RAI and Riverso also argued that Goldman could not be considered to be “on RAI’s payroll” just by virtue of RAI having kept records of what it paid him and that being “on payroll” meant more than just being paid; it meant that tax withholdings were made, FICA taxes were paid, and income was reported on a W-2 form.

RAI and Riverso further contended that Goldman was not entitled to any relief based on his breach of contract claim, and that his unjust enrichment claim was without merit as a matter of law.

The parties agreed that the applicable law with regard to Goldman’s employment status was found in Bynog v Cipriani, which held that five factors must be considered when determining whether a worker is an independent contractor or an employee: “whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer’s payroll, and (5) was on a fixed schedule”.

The parties disputed whether Goldman was required to work standard business hours, and at RAI’s premises. Beyond their respective assertions, each party’s claims were supported with evidentiary submissions. For instance, Goldman’s vacation request and Riverso’s approval tended to indicate that Goldman was not entirely free to make his own schedule– while the lack of tax withholding or health insurance tended to indicate independent contractor status.

Upon a motion for summary judgment the Court’s function was one of issue-finding rather than issue determination. Contrary to both parties’ contentions, the issue of whether Goldman was an employee or an independent contractor could not properly be determined as a matter of law on the present submissions. Rather, an issue of fact was presented which must be addressed at trial, precluding summary judgment on Goldman’s first, fourth and fifth causes of action based on the Labor Law.

Goldman claimed entitlement as a matter of law to the compensation he would have received for the term of the contract, based on the failure to provide him with written notice of termination. RAI argues that Goldman’s breach of contract claim must be dismissed, since he received actual, albeit oral, notice of his termination. 

RAI and Riverso cited case law holding that when a party to a contract fails to give the promised written notice of termination, the injured party’s remedy is to be paid his or her guaranteed salary for the required notice period—and reasoned that, since the agreement provided that Goldman was to be paid only “for actual hours worked,” and since Goldman acknowledged that RAI had the right to reduce his hours, RAI must have had the unilateral right to reduce his hours to zero at any time. RAI and Reverso therefore concluded that Goldman had no right to any money damages for their failure to give him two weeks’ written notice. The Court found that RAI and Riverso had not established a right to dismissal of the breach of contract claim. Conversely, while Goldman established a breach of the agreement’s written notice provision, he did not established as a matter of law the amount of damages to which he was entitled.

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