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Uber, Lyft Drivers Sue New York State for Unemployment Delays

New York, N.Y. – Four former Uber and Lyft drivers and the New York Taxi Workers Alliance filed a lawsuit May 25 against Gov. Andrew Cuomo and the state Department of Labor, charging that the state is illegally delaying unemployment benefits to app-based drivers put out of work by the COVID-19 epidemic.

“Why do we have to wait two months to get something that should have come in two weeks?” — app-based driver Seydou Ouattara

 The suit, filed in federal court in Brooklyn, alleges that the state is not enforcing a 2018 decision by the Labor Department’s Unemployment Insurance Appeals Board that app-based drivers applying for the benefits should be considered eligible as employees, not sidetracked into a new federal program for independent contractors that wasn’t established until weeks after the epidemic shut down much of the nation’s economy. 

It says the state has not required app-based taxi companies such as Uber and Lyft to turn over the wage data needed to calculate how much workers’ weekly benefits will be, leaving drivers waiting for two months or more after losing their jobs to see any money. That, it charges, violates federal law that unemployment benefits be paid “when due” and drivers’ constitutional right to equal protection.

“How are we supposed to survive? I haven’t paid my rent for almost two months,” plaintiff Seydou “Doh” Ouattara, an Uber and Lyft driver who has three small children, said during an online press conference May 26. “Why do we have to wait two months to get something that should have come in two weeks?”

The state is “allowing one group of employers to essentially cheat the system,” said Nicole Salk of Brooklyn Legal Services, an attorney representing the plaintiffs. The law is clear that drivers are eligible for unemployment compensation, she said, but the state has been channeling them into the new federal Pandemic Unemployment Assistance program for independent contractors. That, she explained, has been an “incredibly cumbersome” process in which drivers had to apply for regular unemployment, be rejected, and fax in their own income data.

Ouattara, an immigrant from Cote d’Ivoire who lives in the Bronx, says he was told he was ineligible because he was self-employed, as his income was reported on the 1099 forms used for freelancers, not the W-2 forms for regular employees. Later, he got a letter from unemployment informing him he had “zero income… meaning Uber did not provide my income.” 

On May 26, he finally received a notice saying he was eligible for the Pandemic Unemployment Assistance minimum of $182 a week, plus the extra $600 a week added to benefits through the end of July—but he hasn’t seen any of it yet.

Plaintiff Mohammed Islam, a Lyft and Juno driver from Astoria, had a similar experience. He applied for unemployment on March 24, faxed in his 1099 forms as instructed, and received a notice a month later that he was ineligible because his income from the two companies was $0.00. 

A father of three originally from Bangladesh, he has since been approved for $291 a week in Pandemic Unemployment Assistance, but “I’m not getting any penny yet.” He’s three months behind in the rent, he said, and has a bank balance of “85 dollars negative.”

Delays in receiving unemployment benefits are “the number-one issue” for drivers, said NYTWA executive director Bhairavi Desai. The union has received more than 4,000 phone calls and thousands more emails about it.

“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,” Labor Department spokesperson Jack Sterne responded, adding that they “are receiving unemployment benefits through the Pandemic Unemployment Assistance program quicker than most other states.”

The department says it decided to direct drivers to apply to the PUA program, beginning April 20, rather than treat them as employees, because Uber has a case pending on that issue in a state appeals court. Sterne said he did not know whether that policy was based on a court order or a decision by the Cuomo administration.

“We have provided the data the State requested,” said Uber spokesperson Alix Anfang. The company says the delay was caused by the complexity of compiling large data sets. It notes that a Department of Labor fact sheet issued April 20 instructs people who worked for app-based companies to apply for PUA instead of regular unemployment compensation. 

Uber also insists that it is not “settled law” that drivers are employees, not independent contractors, citing a 2014 federal court decision that held black-car drivers in the city were not required to get overtime pay because they were contractors.

“This is a totally settled issue,” responds NYTWA general counsel Zubin Soleimany. Uber did not appeal the Unemployment Insurance Appeals Board’s 2018 decision, he notes. 

The court case the Labor Department is using to justify denying drivers regular unemployment benefits, he adds, is Uber’s contesting an April 2019 appeals board decision that one of its Albany drivers was eligible for benefits as an employee. 

Soleimany, who is representing that driver along with Salk, says Uber’s argument in that case relies on a 2018 Appellate Division ruling that Postmates app-based delivery workers were ineligible because they were independent contractors—a ruling reversed by the state Court of Appeals in March.  

The Labor Department’s position, he told LaborPress in an email, is effectively “that, as long as Uber finds one case to keep appealing… law will forever remain unsettled, and the law of the case will never apply.”

Normally, said Salk, all employers have to submit wage data to the department quarterly. “It is an automatic system,” she said. “The Department of Labor just needs to make them do it.”

The suit is asking the court to prohibit the department from “misclassifying app-based drivers as independent contractors”; require it to pay benefits immediately; mandate that app-based taxi companies turn over data on drivers’ earnings; and declare that failing to pay unemployment benefits to app-based drivers is illegal.

Desai believes the Cuomo administration is refusing to treat app-based drivers as employees because it is “cozy” with Uber, whose roughly 100,000 drivers make it the biggest private-sector employer in the state, and whose business model relies on cutting labor costs by misclassifying workers as independent contractors.

“The political infrastructure that protects these companies is hiding behind bureaucracy,” she said.

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