Unable to collect unemployment, New York's Uber and Lyft drivers are trapped in a catch-22

New York's rideshare drivers struggle to make ends meet as they await unemployment checks that won't come

Published May 27, 2020 1:40PM (EDT)

Uber/Lyft drivers conduct a ‘caravan protest' (Mario Tama/Getty Images)
Uber/Lyft drivers conduct a ‘caravan protest' (Mario Tama/Getty Images)

Are Uber and Lyft drivers independent contractors, or are they employees? The companies would prefer you believe the former. Indeed, the revenue of Uber and Lyft — and their ability to undercut taxi companies — depends upon local governments to agree that said drivers are mere unsalaried contractors. 

This business model sleight-of-hand generally relies on the legal premise that said drivers are not a fundamental part of the rideshare companies. Yet as the pandemic has taken hold around the world, sharply reducing commutation and travel, oft-exploited Uber and Lyft drivers have suffered to a much greater extent than they would if they had actual employee status with their companies. At the crux of this is their ability to access unemployment benefits, a social safety net which, in many jurisdictions, is only available to employees and not independent contractors nor freelancers. 

As the pandemic has taken hold across the country, states like California and New York have deemed gig workers eligible for collecting unemployment during the pandemic, a special designation that constitutes an effort to protect them in a moment when their employers won't. That implies that in both of these states, these drivers are considered employees. Yet in both states, drivers report being unable to receive unemployment benefits for obscure reasons — either the state's fault, or Uber and Lyft's fault, depending on one's interpretation. Now, a well-publicized class action lawsuit in New York casts blame on the state of New York, alleging they haven't held Uber and Lyft to a sufficient standard of accountability. 

On Monday, a group of Uber and Lyft drivers, along with an advocacy group called the New York Taxi Workers Alliance, filed a complaint on Monday against New York State's Department of Labor and Gov. Andrew Cuomo, stating that they have failed to receive their unemployment benefits in a timely manner befitting their employee status.

One of the plaintiffs, Doh Ouattara, has been unable to pay full rent since April. He has three children, he told The New York Times in an interview. "My savings are almost gone — I've used them for food, basic necessities," Ouattara said. "It is getting very, very stressful."

The lawsuit, which seeks an injunction that would make the state of New York pay the benefits immediately to drivers, highlights how such precarious workers have little in the way of workplace protections or benefits — even in a blue state like New York, which has made its Pandemic Unemployment Assistance (PUA) program open to gig workers, and which considers Uber and Lyft drivers to be employees, not contractors.

According to federal rules, only those ineligible for traditional unemployment benefits are supposed to receive pandemic assistance. However, states like New York are qualifying drivers to apply for pandemic assistance, while businesses like Lyft are encouraging their drivers to apply for assistance from the program.

"The issue of Uber driver employment status has been settled for over a year by the state's own decision," Zubin Soleimany, a lawyer for New York Taxi Workers Alliance told The Times. "But it hasn't been able to provide people benefits when they need them. It's been a catastrophe for these guys."

Jack Sterne, a spokesman for the Cuomo administration, told The Times: "During this pandemic emergency, we have been moving heaven and earth to get every single unemployed New Yorker their benefits as quickly as possible — including Uber and Lyft drivers, who are treated no different than any other worker."

What exactly is the hold up, then? The lawsuit states the delay is likely a result of Uber and Lyft's reluctance to provide data on workers' earnings that employers should supply. This is something that could be enforced by the state, but hasn't, they believe. Since workers' earnings aren't reported, drivers have to fill out a longer application that involved more paperwork. A spokesperson for Uber told the New York Times that the company had provided the state with earnings data. A spokesperson from Lyft said the company is working on reporting earnings.

Yet there are reasons to think the Pandemic Unemployment Assistance program might have been written in a flawed way. An April report by the New York Times suggested that a new program to provide unemployment benefits to previously ineligible workers would likely take weeks to implement. The Pandemic Unemployment Assistance program calculates what a person receives based on income net expenses, meaning a worker's earnings after expenses are deducted. Unemployment benefits are based on gross earnings. In Ouattara's case, this difference means receiving less than $250 a week via the Pandemic Unemployment Assistance Program for gig workers — whereas under regular unemployment benefits rules, Outtara would receive $504 per week. 

In California, where Assembly Bill 5 passed, Uber and Lyft have resisted to take the proper steps to reclassify their drivers as employees instead of contractors. Earlier this month, the state of California filed a lawsuit against Uber and Lyft for failing to reclassify their drivers, alleging they are engaging in an unfair business practice.

There have been reports of Uber and Lyft drivers receiving unemployment insurance from California state's unemployment insurance fund, but Uber and Lyft have yet to contribute, as reported by KQED. Similar to New York, some California drivers have been reportedly directed to the PUA program. 

Indeed, the fight is between big business and the states, but the drivers are caught in the middle and it's hurting them the most. In a survey conducted by Mobile Workers Alliance and We Drive Progress Coalition of 1,087 ride-share drivers between April 24 and April 30, 67 percent said it was unlikely that they would be able to pay their mortgage or rent in May. 

"For the first time in 15 years I'm going to be late on rent. I've made $35 so far this week, less than 10% of where I'd normally be on a Tuesday," Omma Givens, a driver from Antioch, California, said in a statement earlier this month. "Between bills, taxes, maintenance and any unexpected expenses, profit has shrunk to nearly zero."

By Nicole Karlis

Nicole Karlis is a senior writer at Salon. Tweet her @nicolekarlis.

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Furthering Gig Workers Lyft Pandemic Uber Unemployment