Yesterday, we reported on Postmates‘ dispute with Washington’s Department of Labor & Industries over an audit that determined the San Francisco based startup that also operates in the Seattle area owed more than two years of workers’ compensation payments for more than 3,000 couriers from 2013 to 2015.
Postmates did not respond to our requests for comments on the audit, but after the story ran, Rob Rieders, Postmates’ general counsel reached out to GeekWire. He reiterated many of the points made in the company’s response to the audit and emphasized that L&I’s “assessment is based on an inaccurate review of the facts and a misinterpretation of applicable law.”
The audit began after a couple of couriers were injured on the job and filed workers’ comp claims. When looking into those claims, L&I discovered Postmates was not paying workers’ comp for its couriers because it viewed them as independent contractors exempt from the program.
L&I identified a total of just under $320,000 in audited workers’ comp premiums during the audit period from July 2013 to the end of 2015, according to documents obtained by GeekWire through a public records request. It is unclear if that is the exact amount Postmates has to pay because state law restricts L&I from releasing that information. Postmates was also charged a $75,000 fine for insufficient record keeping, or about $25 for each of the 3,011 couriers that worked for the company in Washington state during the audit period.
Washington has a multi-part test to figure out if a business is exempt from workers’ comp, and the audit determined that Postmates did not fit that criteria. The test looks at whether workers are controlled by a central authority, if the service was outside of the company’s normal business scope, and whether the workers kept their own records or registered as independent businesses. L&I concluded that the couriers were working for Postmates, not for themselves.
Rieders argued that Postmates “does not direct or control (couriers’) work in any way.” Postmates considers itself a facilitator or a marketplace that matches customers and couriers. He is confident state law is on his side because couriers provide their own labor supplies — their cars or bicycles — and they perform a service on behalf of third-party customers rather than Postmates itself.
Postmates has requested L&I reconsider its audit findings in what amounts to an appeal. L&I has a standing goal of resolving these types of disputes in 90 days. If L&I denies the request for reconsideration, Postmates can appeal the decision to the Board of Industrial Insurance, and the next step would be taking the conflict to court.
Here is Rieders’ full message and argument against L&I’s audit findings:
The Department’s assessment is based on an inaccurate review of the facts and a misinterpretation of applicable law. The Department ignored the legal requirement that couriers who use the Postmates app must be “working under an independent contract, the essence of which is his or her personal labor” for Postmates.
Washington courts have recognized that this requirement is not satisfied, and therefore workers’ compensation taxes are not owed, where an independent contractor must own or supply equipment (such as a vehicle) to perform the contract, or where the independent contractor is providing services to a third party (such as a consumer). Both apply to couriers who use the Postmates app — they are hired by consumers specifically because they can quickly transport items using their own vehicle, and the services are provided to the consumers (not Postmates).
The Department skipped over this requirement, and proceeded to a separate statutory test that only applies to independent contractors who satisfy the requirement of providing personal labor to the alleged “employer.” Even if this separate test were the correct standard, Postmates would still not owe workers’ compensation taxes for the couriers because, among other things, Postmates does not direct or control their work in any way. As a result, as your article points out, Postmates has formally requested that the Department reconsider its position.