October 14, 2016
By Steven Wishnia
New York, NY – Uber drivers have won a small but significant victory: The New York State Department of Labor has ruled that two drivers who applied for unemployment benefits after being “deactivated” were company employees and not ineligible independent contractors.
The two, Jakir Hossain and Levon Aleksanian, are both plaintiffs in a lawsuit the New York Taxi Workers Alliance filed against Gov. Andrew Cuomo and the Labor Department, which has been holding all unemployment-benefits claims by Uber drivers under “executive review.” Hossain, who also drove for Lyft, was approved for benefits, while Aleksanian, who applied more than a year ago, is waiting for a ruling on whether he lost his job for reasons that weren’t his fault.
“This is a historic victory,” NYTWA executive director Bhairavi Desai said at a press conference Oct. 13 in front of the department’s Lower Manhattan offices. “But we know it is just the beginning.”
The key issue in determining whether a worker is an employee or an independent contractor is “who has control over working conditions,” said Brooklyn Legal Services attorney Nicole Salk. “Uber has complete control.” The Department of Labor, the lawsuit argues, has “consistently found black car bases, with similar terms of employment to Uber, to be employers.” Several court cases have upheld that, including a 2010 ruling by the state Appellate Division that a black-car base was an employer because it paid its drivers a set commission per fare, dispatched trips to drivers specifying pick-up and drop-off locations, and set all fare rates.
Nothing about Uber is different from those black-car bases, said NYTWA staff attorney Zubin Soleimany. Uber argues that its drivers like the freedom of being independent contractors, of being able to set their own hours, he added, but that is giving drivers a “false choice” between flexibility and their basic legal rights as workers.
While the ruling is not binding on other cases, it might affect thousands of drivers applying for unemployment, Desai said. On a deeper level, she added, it puts a crack in Uber’s business model, which depends on classifying drivers as independent contractors. That misclassification means it can offer lower fares and flood the streets with drivers, because it doesn’t have to pay them minimum wage or overtime. It also means that Uber doesn’t have to contribute to the state’s unemployment-benefits fund.
Aleksanian, 32, immigrated from Armenia 10 years ago and now lives in Queens with his wife and two children. He began driving for Uber in August 2014. At first, he told LaborPress, he was making enough money to work a 40-hour week, but after the company cut fares by one-third later that year, he had to work seven days—and still “wasn’t making enough to cover expenses.” But he was stuck in the job, he says, because he had borrowed money to buy the car. He was deactivated in September 2015, after his hack license was mysteriously revoked. He is now working part-time as a home health-care aide.
Former Uber driver Jeffrey Shepherd, who is still waiting for a ruling on whether he was an employee, said he was attracted by the company’s “be your own boss” ads—but “the reality was much different.” He worked for Uber for a year, he said, driving 12 to 15 hours a day, seven days a week, but often made less than $1 a week after expenses were deducted—including $415 a week in payments to an Uber-approved car dealer. He was deactivated, he said, when his car was repossessed after he didn’t work during a snowstorm and thus didn’t bring in enough money for Uber to make the payments on it.
While people who quit jobs are usually ineligible for unemployment benefits, leaving because you’re not making enough to cover basic living expenses is an exception, the NYTWA says.
Uber is likely to appeal the Department of Labor decision to higher courts, said Desai. Meanwhile, NYTWA is continuing the lawsuit, calling on the department to conduct a comprehensive audit of Uber to determine that all drivers are employees and therefore eligible for unemployment benefits and protected under wage and hour laws. California’s labor department has ruled three Uber drivers were employees, said Soleimany, two who were applying for unemployment benefits and one in a case involving wages and hours.
As of now, said Salk, the New York labor department is reviewing applications for unemployment on a case-by-case basis. That means drivers have to fight each case individually, going without income for months while going up against a multibillion-dollar corporation.