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Is New York helping Uber and Lyft “cheat the system?”

| Jun 25, 2020 | Labor Law |

Uber and Lyft drivers claim that the State of New York is helping their employers “cheat the system” by denying them the unemployment insurance benefits they say are their entitlement. Gothamist.com reports that the New York Taxi Workers Alliance filed suit last month against New York Governor Andrew Cuomo, the New York Department of Labor and Roberta Reardon, the department’s commissioner.

The underlying issue in this lawsuit is how Uber and Lyft should categorize their drivers: as employees or as independent contractors.

Unemployment benefits responsibility

During the current pandemic, hundreds of Uber and Lyft drivers have found themselves out of work. But when they applied for unemployment benefits, the Department of Labor denied their claims. Why? It said they failed to qualify for state unemployment insurance because they “are not technically employees.”

Instead, the DOL referred the drivers to the Pandemic Unemployment Assistance program. This federally-funded program exists under the CARES Act, but is set to expire at the end of this year.

Delayed payments

The problem with PUA is two-fold: its payments take considerably longer to receive and they represent substantially less money than that provided by regular unemployment insurance.

Lawsuit specifics

The lawsuit cites a 2018 ruling declaring that Uber drivers and others “similarly employed” as drivers are indeed employees and therefore qualified to receive traditional unemployment insurance benefits. A subsequent court ruling issued earlier this spring held likewise.

Uber, however, insists that its drivers are independent contractors, citing a 2014 federal court case upheld on appeal. Lyft, on the other hand, has failed to provide the DOL access to its drivers’ earnings data, citing lack of a secure method by which to share such data.

Until the court resolves this issue once and for all, hundreds of Uber and Lyft drivers continue to go without unemployment insurance benefits, or, at best, receive reduced payments weeks after they apply for PUA benefits.