NY Uber drivers are “employees” for UI purposes
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Friday, March 22, 2019

NY Uber drivers are “employees” for UI purposes

By Payroll and Entitlements Editorial Staff

New York unemployment insurance board ruling that Uber drivers are "employees," not independent contractors, for unemployment insurance compensation purposes stands as final determination.

Legal Services NYC is touting a legal victory for New York Uber drivers as the result of the rideshare giant’s withdrawal of its appeal of a New York State Unemployment Insurance Appeal Board decision finding that New York Uber drivers and all similarly situated drivers are considered "employees" for the purposes of unemployment insurance. Uber is now expected to begin making unemployment contributions for drivers.

If Uber fails to make contributions, the NYS Department of Labor has committed to "conduct an investigation to determine the amounts of contributions that are due as a result of this decision," according to Legal Services NYC. The administrative law judge who issued the ruling said that Uber is responsible for contributions going all the way back to the first quarter of 2013 for each claimant, and for all drivers with employment conditions similar to the three drivers whose experiences seem to cover the vast majority of drivers in New York City.

Case hard fought. The appeal withdrawal follows months of legal wrangling. Brooklyn Legal Services, a program of Legal Services NYC, first filed a federal lawsuit in July 2016 on behalf of the New York Taxi Workers Alliance (NYTWA) and former Uber drivers complaining that the New York State Department of Labor was refusing to investigate their claims for unemployment. Almost immediately after filing the federal suit, the NYS Department of Labor began processing Uber drivers' claims and found the three former Uber drivers as well as other individuals similarly situated to be employees for the purposes of unemployment benefits.

First appeal. Uber appealed the finding. On June 9, 2017, an ALJ held combined hearings for the three drivers and overruled Uber’s objection that the claimants were independent contractors.

Second appeal. Uber again appealed to the Board, which held hearings for more than a year, with the NYS Department of Labor arguing on the side of the drivers. The unusual supplemental hearings were held largely at Uber's behest, according to Legal Services NYC. After 11 months and several additional hearings, on May 31, 2018, Uber made an eleventh-hour attempt to withdraw its appeal when it became clear that the company was going to lose. However, the Board rejected the withdrawal attempt and issued a final ruling in July 2018 affirming that the three Uber drivers, and any other individuals similarly situated, are employees for the purposes of unemployment benefits. This is now the final decision of the Board.

Criteria. The Board found that Uber exerted control over drivers and acted as an employer based on the following criteria:

  • Uber assigns work by dispatching drivers through the App;
  • Uber sets the fare rates and collects the fares from passengers; Uber sets the pay rates for drivers and pays drivers;
  • Uber maintains a 5-star rating system for drivers and deactivates drivers who fall below 4.5 stars;
  • Uber monitors drivers' performance and fields complaints; and
  • Uber monitors drivers' acceleration, breaking, speed, and routes driven while on the App.

This landmark decision is now the official position of New York State government and sets a precedent for all Uber drivers who apply for unemployment insurance in New York in the future.

Final appeal withdrawn. Uber then appealed the Board's ruling to the New York State Supreme Court's Appellate Division, and on the final day the company had to submit the merits its appeal, it instead withdrew the appeal, according to Legal Services NYC. "This is a huge victory for Uber drivers in New York State and an amazing precedent for for-hire drivers across the US who are currently navigating the long and drawn-out process of applying for unemployment benefits," Nicole Salk, an attorney at Brooklyn Legal Services who filed the case, said in a statement. "Uber drivers who suddenly find themselves out of a job shouldn't have to jump through countless hoops to get the unemployment benefits they are entitled to. We are now waiting on the NYS Department of Labor to make good on their promise to audit Uber to determine how much the company owes the state in unemployment contributions."

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