NY: Ruling that Uber Drivers are Employees Could Impact ‘Gig Economy’

Liz Carey

New York, NY (WorkersCompensation.com) – A New York City unemployment board’s ruling that Uber drivers should be considered employees of the company could have a sweeping impact on the gig economy as a whole, experts said.

On July 17, a New York State Unemployment Insurance Appeal Board ruled that three former Uber drivers who had filed for unemployment benefits should be considered employees for the purposes of unemployment benefits, instead of contractors.

Coupled with other court rulings, experts said the rulings could indicate a shift in the way gig economy workers, like drivers for Uber and Lyft, are classified.

Classification rulings determining whether or not gig workers are contractors or employees could impact whether or not companies will have to pay for employee benefits like workers’ compensation insurance, unemployment insurance, social security and taxes, as well as other benefits like sick leave and vacation. In 2017, Uber offered its drivers a voluntary workers’ compensation insurance plan, paid for through deductions from the drivers’ fares.

In the New York case, Levon Aleksanian and Jakir Hossain were deactivated as drivers in 2015 and 2016. The two men filed for unemployment benefits from the state, but when the case took months to adjudicate instead of weeks, the two filed suit. Another driver, Jeffrey Shepherd, also made unemployment claims when he quit working for Uber citing payment below minimum wage.

The case was sent to the unemployment insurance board, which found that the three men “and those similarly situated” should be considered employees for the purposes of unemployment insurance.

Danielle Filson, an Uber spokesperson, said the company was determining how to answer the ruling.

“We disagree with this ruling and we are reviewing our options,” she said in a statement to WorkersCompensation.com. “We are confident that the ruling uniquely applies to the three claimants because many of the practices cited in the opinion never applied to one or more of the claimants, are no longer in place, or never existed at all.”

According to Uber, some of those practices include a road map test, deactivation for a low acceptance of assignments rate and requiring drivers to watch an introductory video — something Uber says has never been a practice at the company.

But the ruling is similar to one in California, known as Dynamex, which would make it more difficult for companies like Uber and Lyft to unilaterally declare their workers to be independent contractors.

“Dynamex makes it much more likely that Uber drivers in California will be considered employees for wage purposes, but we do not yet have any decision on the matter,” said Veena Dubal, a labor law professor at the University of California Hasting College of Law in San Francisco, according to Ars Technica. “Together, both decisions (in California and New York) reflect what I think is a turning of the tides — a growing legal recognition that so-called gig workers’ are really employees in disguise.”

“It will be interesting to see if Uber now starts to develop a new model, or wants to contest this, or accepts the fact that as far as New York is concerned, (drivers) will be employees in most instances” for the purposes of unemployment insurance, NY Employment Attorney David Raff told Politico.

A recent New York City survey found that Uber has more than 65,000 drivers listed as independent contractors, making it the largest for-profit employer in the city, if all of its drivers were considered to be employees. The company has an exceedingly high turnover rate, however.

Were Uber to be forced to pay unemployment to deactivated drivers, the financial burden would be substantial, experts said.

But according to Uber, those court cases are applicable only to California and New York City. Per the company, a federal court has determined that NYC Black Car drivers, like Uber drivers, are independent contractors, as has the Department of Labor.

In 18 states (Florida, Arizona, Georgia, Kansas, Massachusetts, Minnesota, California, Colorado, Delaware, Illinois, Indiana, Pennsylvania, Nebraska, New York, Texas, Utah, Virginia and Wisconsin), the company said, Uber drivers have been determined to be independent contractors, and in six of those states (Florida, Arizona, Georgia, Kansas, Massachusetts and Minnesota), Uber drivers have been determined to be independent contractors for the purposes of unemployment insurance.

A spokesman for Lyft said the company would respond to emailed questions from WorkersCompensation.com, but had not responded as of press time.