INTERNET LAW - TELECOMMUTING AND UNEMPLOYMENT BENEFIT CLAIMS

Staff Attorneys, IBLS Editorial Board
Maxine Allen v. Commissioner of Labor established a New York State precedent regarding the eligibility of telecommuters to receive unemployment benefits. The case concerned Maxine Allen, a telecommuter who worked for a Long Island employer from her home office in Florida. The labor case eventually reached New York's Court of Appeals which ruled that the location of the telecommuting worker is the key determinative factor regarding a worker's eligibility to receive unemployment benefits in the state to which the worker applied, as opposed to the location of the employer.
In 2003, the New York Court of Appeals held that physical presence governs eligibility for unemployment insurance benefits, as opposed to the location of the employer's offices.

The case involved Maxine Allen, an employee of Reuters America Inc. She had worked for the company for less than a year in Long Island when her husband's position was transferred to Florida. At that point, she came to an agreement with her employer that she would work from her home office in Florida, and the employer was to supply the necessary equipment and access to the corporation's mainframe computer in New York.

This telecommuting agreement was in force from July 1997 until March 1999, at which point the agreement was terminated. Although Allen was offered to relocate back to New York, she declined on account of her husband's position in Florida. When Allen sought to claim unemployment benefit in Florida, her application was denied on the basis that she voluntarily left her job without good cause. The Florida Department of Labor and Employment Security advised Allen that she would qualify for benefits in New York.

NY Unemployment Insurance Appeal Board held that Allen was ineligible for benefits in New York because her work performance took place in Florida. The case was finally determined by New York's Court of Appeals. The Court of Appeals held that an individual's physical presence is the localization determining factor when interpreting and applying subsection 511 of the Labor Law Code to interstate telecommuters. Since Allen was regularly present in Florida, she was held to be localized there. The claimant was held to be ineligible for New York unemployment insurance benefits.


On what basis did the Court of Appeals reach its decision?
The court based its decision on a four-pronged test for determining the applicability of New York labor law: (1) localization; (2) location of base of operations; (3) source of directions or control; and (4) employee's residence.

How was Allen's employment as a telecommuter classified in terms of its localization by New York's Court of Appeals?
Allen argued that to claim employment benefits, she was not required to have physical presence in New York because her entire services were performed on Reuter's mainframe computer which was located in New York. Applying the above-mentioned test, the New York's Court of Appeals rejected Allen's argument holding that Allen's residence outside of New York precluded her from receiving unemployment benefits in New York.

What are the ramifications of this holding?
According to statistics published by the International Telework Association and Council, approximately 28 million Americans telecommute. This ruling sets a clear precedent (which is only binding in New York) that telecommuters should seek unemployment benefits from the state where they physically work as opposed to the state where their employer is located. In addition, it is advisable for telecommuters to negotiate with their employers to determine, in advance, the state in which their employment is situated, thus avoiding future disputes.