In what worker advocates are calling a substantial victory that could impact Uber drivers statewide, the New York State labor review board has made a final determination that three former Uber drivers were Uber employees for the purposes of unemployment insurance.
The finding applies to the drivers in question, as well as all “similarly situated” drivers.
The issue of unemployment insurance, while seemingly arcane, underscores a pivotal question for the global gig economy: Are the people driving for Uber or delivering coffee for Postmates independent contractors or are they employees with benefits like unemployment insurance?
New York state now appears closer to having an official position, one that Uber fought hard to forestall. The company has exhausted all options for challenging that decision within the confines of the labor department.
“We won and they lost,” said New York Taxi Workers Alliance Executive Director Bhairavi Desai, in an interview on Wednesday.
The Taxi Workers Alliance believes the decision will be “broadly precedential,” and creates a new “safety net” for a beleaguered workforce.
David Raff, a longtime employment law attorney, says that’s a “fair interpretation.”
“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, Raff said.
If Uber wants to further contest the Board’s findings, it will have to do so in state court.
In a statement, Uber spokeswoman Alix Anfang didn’t reveal the company’s plans, though she did downplay the decision’s significance.
“We disagree with this ruling and we are reviewing our options,” she said. ”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.”
“Uber has the right to appeal this decision,” said Labor Department spokeswoman Jill Aurora. “If they do not appeal the decision, it will become final and Uber will be required to make UI contributions for these, and other similarly situated drivers. If Uber fails to make such contributions, the Department’s procedure would be to conduct an investigation to determine the amounts of contributions that are due as a result of this decision.”
Uber’s workforce in just New York City numbers more than 65,000, and is growing.
A recent city-commissioned report found that, “Uber alone would be the largest for-profit private employer in New York City — if Uber drivers were classified as employees rather than independent contractors.”
The company is also known to have heavy turnover. Should Uber now have to pay hundreds of dollars a week in unemployment insurance to deactivated drivers, it would face a heavy financial burden.
It was on July 12 that Unemployment Insurance Appeal Board member Randall Douglas, affirming a 2017 administrative judge’s decision and the Labor Department’s findings, found that “the claimants and other similarly situated [Uber] drivers were covered employees for purposes of unemployment insurance.”
He was ruling on the cases of three former Uber drivers, and while he did not define “similarly situated,” the drivers’ cases were sufficiently distinct for advocates, and Raff, to conclude that the decision’s impacts will be far-reaching.
“It’s huge,” Desai said. “It’s really significant, because it’s the first bona fide safety net for drivers in this economy … We now have a decision that reflects the official position of the state, one that the state has to defend and execute.”
This decision caps a saga that began in 2016, when former Uber drivers began to notice a curious phenomenon. Their claims for unemployment insurance were taking months, not three to six weeks, as was typical.
A labor department official told one former driver, via email, that claims like his were “under executive review, which means the Dept of Labor is not making the decision whether or not this employment is covered. Your claim will remain pending until such time as a determination has been made.”
The delays spawned a federal suit.
Last summer, an administrative judge found that “the overriding evidence establishes that Uber exercised sufficient supervision, direction, and control” over the lives of three drivers so as to create an “employer-employee relationship.”
Uber appealed, and then, 11 months later, sought to rescind its appeal, an unusual move that sparked bemusement among employment-law types who theorized the company was fearful the decision could have wide-ranging effects on its model.
It evinced a “disdain for the system” and a willingness to “waste everyone’s time and resources,” Raff said.
“In the interest of justice,” the board denied Uber’s request to withdraw its appeal, and rejected its argument.
“We started off with the claims from the drivers gathering dust in some corner under ‘executive review,’ to now, with the drivers being victorious at the highest level of the agency,” Desai said.