Court: Unemployment Based on Physical Presence

July 3, 2003 ( - With sweeping implications for telecommuters, the New York Court of Appeals has determined unemployment insurance eligibility is determined by physical, and not virtual, presence.

>The appellate court turned to Section 511 of the Labor Law for a definition of employment on which to base its decision, finding the definition refers to work localized in a particular state and a person’s “base of operation,” and is derived from the uniform standard embraced by most states of physical locale.   Thus, the court rejected the plaintiff’s contention that she was eligible for unemployment benefits in the virtual state of application, according to a New York Law Journal report.

“In our view, physical presence is the most practicable indicium of localization for the interstate commuter who inhabits today’s ‘virtual’ workplace linked by Internet connections and data exchanges,” Judge Susan Phillip Read wrote for the court.

“While the drafters of the uniform rule could not have envisioned a world of interstate telecommuting, these underlying purposes remain valid, and are best served by tying localization to the state in which an interstate telecommuter is physically present,” Read added.

Virtually There

Maxine Allen, worked as a computer specialist with Reuters America Inc. at the company’s Long Island headquarters until her husband changed jobs and they moved to Florida. When Allen moved, Reuters provided her with a laptop computer and other equipment necessary to connect to the company’s mainframe in New York, so she could continue her employment with Reuters.

Despite her remote location, Allen’s job was very similar to before.   She was required to maintain regular hours, report sick days, obtain permission to start her day late or end it early, and was in daily contact with her supervisors.

>In 1999, Reuters ended the telecommuting arrangement and Allen declined the company’s offer to return to the New York office.   After being let go, she applied for unemployment benefits; initially in Florida, but later in New York after finding out that the Empire State paid considerably more ($365 weekly compared with $275 weekly).

Initially, the New York state Department of Labor said she was not eligible. However an administrative law judge said she was.   Before coming before the appeals court, the Unemployment Insurance Appeal Board found that Allen was not eligible because all of her work was performed in Florida.

The case is Allen v. Commissioner of Labor.