Rodney Gould Prevails in New York Case: Tour Guides as Independent Contractors

Over the last decade or so, courts throughout the country, but especially in states such as California and New York, have grown increasingly hostile to tour operators engaging guides for their trips as independent contractors rather than employees. Of course, other members of the broader travel industry have had the same problem with sales representatives, local coordinators, etc. Among other setbacks have been a couple of class actions in California involving tour guides as well as many cases just involving one person. 

Recently in New York, in an action in which we represented a student tour operator, an Administrative Law Judge determined that a guide who filed for unemployment benefits was not an employee of the tour operator but an independent contractor. In so ruling, he reversed an initial determination made by the New York Department of Labor. The decision was particularly welcomed because the same guide had successfully claimed employee status against another student tour operator.

For many tour operators, guides are an important value-add for tours, but the cost for maintaining them as employees is high. Employee status results in withholding requirements, unemployment benefit contributions, workers’ compensation, and a slew of other regulatory concerns. 

The ALJ’s analysis was thorough and relied on the general rule that where a tour operator merely controls the result of the work performed by a guide, and not the manner in which the guide performs the work, the tour operator lacks sufficient control over the guide to warrant her being categorized as an employee. Specifically, the ALJ relied upon the facts that the guide was able to accept or reject assignments at will and could ask for pay increases, the guide was completely free to work for competitors, the guide could change details of itinerary as necessary and without permission from the tour operator, the guide used her own talking points to the group (again, without any prior approval by the tour operator), and the guide did not report to a supervisor. Importantly, the tour operator did not use guides on all of its trips, defeating one of the common factors used to point to employee status – that the individual was performing work integral to the company’s business. 

The ALJ concluded that while the contract between the parties had a “no solicitation” clause that prevented the guide from directly soliciting the tour operator’s clients, that by itself was not enough to establish an employer-employee relationship.

Any company that utilizes guides, sales personnel, or local coordinators, and treats them as independent contractors or wishes to do so, should consult counsel as to how best to position itself to survive an attack predicated upon claimed employee status. Different jurisdictions may treat these questions of law and fact differently.