Judge orders New York to pay unemployment to Uber and Lyft drivers

A federal judge has ordered the state of New York to quickly pay unemployment benefits to four Uber and Lyft drivers who have been waiting for the payments since March or April. The New York Taxi Workers Alliance, which filed a lawsuit over the issue back in May, says that the ruling could ultimately help thousands of drivers in similar situations.

Uber and Lyft have long argued that its drivers are independent contractors, not employees. That stance has come under increasing pressure. Since 2016, the New York Department of Labor has held that ride-hail drivers were employees for purposes of unemployment insurance. But Uber and Lyft have dragged their feet, failing to provide wage data that would enable the agency to calculate unemployment payments for each worker.

As a result, when Uber and Lyft drivers forced out of work by the pandemic applied for unemployment benefits, some were told that they weren’t eligible because state data showed them with zero earnings. Workers continued to be denied benefits even after they submitted 1099 tax forms showing their earnings.

One of the plaintiffs who worked at Subway in 2019 received a weekly benefit of $155—reflecting his Subway earnings but not his earnings as an Uber and Lyft driver.

In her Tuesday ruling, Judge LaShann DeArcy Hall sided squarely with the drivers. She acknowledged that Uber and Lyft bore some of the blame for failing to supply the state with necessary data. But she said the state still had an obligation to pay benefits promptly—using data supplied by workers themselves if necessary.

To ensure that benefits are paid promptly in the future, Hall ordered the New York Department of Labor to create a 35-member workgroup to expedite applications from ride-hail drivers that have languished in the agency’s appeal process. She ordered the agency to clear its backlog of applications from ride-hail drivers within 45 days and then process any new applications within 14 days.

The ruling comes at a time of uncertainty and stress for the unemployment system. Unemployment offices have faced an unprecedented surge of unemployment claims from people who lost jobs due to the COVID-19 pandemic. Some state unemployment offices have scrambled to find COBOL programmers to help them upgrade their ancient unemployment systems.

Under the CARES Act, passed in March, many unemployed workers have been entitled to an extra $600 in weekly benefits. But those benefits are due to expire at the end of the month. It’s not clear if Congress will pass legislation extending the enhanced benefits beyond July.