Drivers for Uber and Lyft should immediately start collecting state unemployment benefits in New York after a federal judge ruled Tuesday in favor of a lawsuit brought by drivers and the New York Taxi Workers Alliance against the state.
The lawsuit, filed in May against Governor Andrew Cuomo, the Department of Labor, and the department's commissioner Roberta Reardon, faulted the state for failing to pay unemployment benefits promptly.
"The DOL has continued to treat app-based drivers' applications for benefits as though they are independent contractors, placing the burden on drivers to prove their earnings and employment status," the lawsuit said.
The lawsuit points to a 2018 ruling that determined that Uber drivers and others "similarly employed" as a driver should be classified as employees to qualify for traditional unemployment insurance. Another court ruling issued in late March also determined that delivery app workers for Postmates must be classified as "employees."
Without state unemployment benefits, Uber and Lyft drivers in New York were eligible only for federally-funded Pandemic Unemployment Assistance—an expanded benefit for out-of-work freelancers during the COVID-19 pandemic under the CARES Act.
In her ruling Tuesday, District Judge LaShann DeArcy Hall for the Eastern District of New York cited “an avoidable and inexcusable delay in the payment of unemployment insurance” to drivers, the NY Times reports. DeArcy issued a temporary injunction so that drivers may begin to collect payments even if the state appeals the case.
Another issue was the delay in processing claims, as the state said they couldn't pay out unemployment claims without earnings data from Uber and Lyft -- leading drivers into a situation where they "receive a statement saying that they have no earnings on file regarding their work for Uber and Lyft, forcing them into a bureaucratic process to demonstrate their eligibility for traditional benefits that can last months," according to the Times.
According to a copy of the ruling obtained by the Times, the state Department now has seven days to assemble and train a “work group” of "several dozen staff members who will identify backlogged claims by drivers who have sought 'reconsideration' after being told that they were ineligible, and take the necessary steps to pay them promptly. The state has 45 days to resolve this backlog."
At the time the lawsuit was filed, Uber disputed drivers' classification as employees, citing a 2014 federal court ruling that was upheld on appeal. Lyft described the lawsuit a result of "special interests" not interested in "what's best for drivers," emphasizing the lawsuit was organized by a labor union.
In a statement responding to the ruling, Uber spokesperson Alix Anfang said, "Our current employment system is outdated and unfair because it requires that employees get benefits and protections, while independent workers who choose flexible work don’t. We fought for all workers to receive unemployment benefits in the CARES Act, we provided all data the NYDOL requested so they could give independent workers financial assistance, and we will continue to fight for all workers to get financial support—not just those doing a certain type of work.“
Lyft did not immediately respond to a request for comment Tuesday, nor did the Governor's office.