Unemployment benefits are increasing in importance during the COVID-19 pandemic, with record-breaking unemployment rates and mass layoffs across the country. The rideshare industry has seen a massive reduction in the number of passengers during COVID-19, and many Uber and Lyft drivers are losing important income as a result.
While Uber and Lyft drivers in New York are eligible for unemployment benefits, the state has been slow to process their claims. Now, a landmark federal court decision will require the New York Department of Labor to expedite these payments.
Why Is It Difficult for Rideshare Drivers to Receive Unemployment?
Uber and Lyft, two of the most popular rideshare platforms on the market, operate using similar business models. Both companies consider the drivers who operate their fleet to be independent contractors, not employees. This essentially releases the companies from liability if their drivers cause an accident, among other company-centric benefits.
However, this designation puts Uber and Lyft drivers at a disadvantage when it comes to unemployment benefits. Different states have different rules regarding unemployment, and certain unemployment programs do not allow independent contractors to receive these benefits.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act does provide provisions for independent contractors. However, individual states have to choose whether or not to extend unemployment benefits to contractors, and certain governments have been hesitant to adopt this provision. Other governments have been slow to pay eligible contractors the benefits they need.
The New York Federal Decision
While New York adopted the independent contractor provision under the CARES Act, the state has been slow to process unemployment payments to Uber and Lyft drivers. A group of rideshare drivers, as well as the advocacy group New York Taxi Workers’ Alliance, filed a lawsuit against the New York Department of Labor for this delay.
The lawsuit alleges that the process for unemployment benefits took several months to complete for rideshare drivers, and the Department denied benefits for many drivers. Other employees in New York were able to receive payments within two to three weeks. In July 2020, a New York federal judge ruled in favor of the rideshare drivers.
The ruling, which came from Judge LaShann DeArcy Hall, states that Uber and Lyft drivers are eligible to receive unemployment and the state must process its backlog of applications within 45 days. The Department will form a working group to expedite this review.
Employment Rights for Uber and Lyft Drivers
Although the rideshare drivers filed their lawsuit against the state of New York, Uber and Lyft are likely to blame for the unemployment delays. State labor departments need driver earnings data from Uber and Lyft to process unemployment applications, and they do not always send this information in a timely manner.
It is not in the best interest of these companies to extend employee benefits, including unemployment insurance, to their drivers. The July 2020 ruling alleges that the state of New York has not done enough to force Uber and Lyft to provide this required data, and more states may require these companies to extend important benefits to their drivers.
If you are an Uber or Lyft driver pursuing an unemployment claim and you believe your state’s labor department unfairly denied or delayed your benefits, you should contact an attorney to discuss your claim. Speak to an Uber assault lawyer with experience working with rideshare drivers in your state.