Labor & Employment Law Daily Uber drivers are employees for unemployment insurance purposes, NY UI appeal board finds
Wednesday, July 25, 2018

Uber drivers are employees for unemployment insurance purposes, NY UI appeal board finds

By Pamela Wolf, J.D.

Rejecting Uber Technologies’ last-minute bid to withdraw its appeal, the New York State Unemployment Insurance Appeal Board has ruled that three New York Taxi Workers Alliance (NYTWA) members and former Uber drivers, as well as those who are similarly situated, are employees of the company for the purposes of unemployment insurance.

“The credible evidence establishes that Uber exercises sufficient supervision, direction or control over the three claimants and other similarly situated Drivers,” wrote Appeal Board Member Randall T. Douglas in a July 12 decision. Among other things, the Board found that the rideshare company exercises control through its in-person assistance at its hubs where drivers are screened, are required to view the orientation onboarding video of essential information, and are required to take Uber’s roadmap test. Uber also gives drivers its handbook and signage, and refers them to specific dealerships to lease Taxi and Limousine Commission-licensed vehicles.

The decision may or may not be the handwriting on the wall for rideshare companies, forecasting impending liability as an employer for other legal purposes, too.

Exercising control over drivers. Among other things, the Board found that Uber also exercises control through its Driver App, which sets up the information that appears on the Driver App; sets the fares charged to Riders; sets the rate of pay to drivers and the occasional income guarantee; sets the various incentives and promotions; and sets the music, tipping, and deactivation policies. The ridesharing company assigns the work by dispatching trip requests to the closest individual driver who must accept the dispatch within the Uber’s 15-second mandate. The company also provides the requisite tools, such as built-in maps on the Driver App and Uber signage, conducts an occasional “ID check” on the Driver App, and sets the order of Riders’ drop-off for UberPOOL.

Uber also exercises control by providing in-person support to drivers and monitoring their performance, solely determining when and how long to deactivate a driver for failing to meet the company’s performance standards. The company also fields complaints and regularly communicates feedback to drivers, including the minimum threshold star rating necessary to avoid suspension, and communicates the trip’s most efficient route and the drivers’ acceleration, braking, and overall speed. Uber occasionally reimburses drivers. Further, the company handles all the bookkeeping needs, including collecting from riders, adjusting for mandatory pay deductions, and paying drivers directly.

More than a technology platform. While Uber contends that it is merely a technology platform that connects riders to drivers, the Board found that its business is similar in many respects to other more traditional car service companies. Uber’s technology merely replaces much of the duties that an employee-dispatcher would perform to dispatch a trip request solely to the nearest driver who may accept the dispatched assignment. The record also demonstrates that Uber markets its transportation services to drivers and riders alike, selects only qualified drivers, monitors and supervises their performance, rewards high-performing drivers, disciplines drivers who fail to meet company standards on a temporary or permanent basis, sets the fare prices that riders are charged, and sets the driver’s fee paid to Uber.

5-star rating system. The Board found it significant that Uber requires each rider to rate their driver under its 5-star rating and provide written feedback on the driver’s performance, which is then used to monitor and discipline drivers, including suspending or terminating their relationship. “Effectively, Uber utilizes Riders’ ratings and feedback as one of various tools with which to gauge and otherwise monitor Drivers’ performance including cleanliness, professional attire, and driving manner,” wrote the Board. “The direct consequences and implications of the mandated 5-star rating and feedback demonstrate control.”

More than meeting regulatory mandates. The Board also pointed out that the record contained ample evidence showing that Uber, once the drivers are logged in for duty, exercises or reserves the right to exercise sufficient control beyond regulatory mandates, including its 5-star rating system and list of acceptable cars. The record, as a whole, demonstrates that the claimants and other similarly situated drivers were covered employees for purposes of unemployment insurance, the Board ruled.

“This decision falls in line with nearly thirty years of Unemployment Appeal Board and court precedent finding drivers to be employees in similar circumstances,” said Zubin Soleimany, NYTWA Staff Attorney. “While Uber has long argued that is merely a technology company that did not control its drivers, Uber’s use of technology actually created a more pervasive system of supervision and control than had ever been used by other car services that the Appeal Board and the courts found to be employers for decades. Through its own programming, Uber solicits supervisory feedback on every trip a driver takes, monitors driver behavior, reviews drivers’ routing choices, docks their pay for taking inefficient routes, and even tracks and evaluates the relative smoothness at which drivers brake and accelerate. App-based employers should not be able to insulate themselves from responsibilities as employers by hiding behind a smokescreen of technology.”

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