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July 19, 2018: NY Uber Drivers Are Employees with Right to Unemployment Insurance

NYS Unemployment Insurance Appeal Board Issues FINAL Ruling Rejecting Uber's Position & Siding with NYTWA Uber Driver Members

It is Now the Official Position of New York State that These Three Drivers & All Those Similarly Situated are Employees of Uber for the Purposes of Unemployment Insurance

JULY 19, 2018

(New York, NY) The New York State Unemployment Insurance Appeal Board has rejected Uber's 11th hour attempt to withdraw their appeal and issued a ruling that three NYTWA members and former Uber drivers and all those similarly situated are employees of the company for the purposes of Unemployment Insurance.

This is the final decision from the NYS Unemployment Insurance Appeal Board meaning that it is now the official position of the State of New York that these three Uber drivers and all those similarly situated who quit because they can't make ends meet or are "deactivated" through no fault of their own are employees for the purposes of unemployment insurance benefits. The landmark decision sets a precedent for Uber drivers who apply for Unemployment Insurance in the future and could also be persuasive in other contexts where the employment status of Uber drivers is in question.

"This decision gives drivers a safety net, and one that Uber has to pay for, challenging Uber's business model of low pay and lower retention. Uber treats drivers as if they are expendable, and up until now, it's never had to come at a risk or cost to the company," said Bhairavi Desai, Executive Director of the New York Taxi Workers Alliance. "We started off with claims from the drivers gathering dust in some corner under 'executive review' to now the drivers being victorious at the highest level of the Department of Labor. It shows that when drivers unite to fight Uber's business model, we can win. As the city council and the mayor are looking to regulate this company, I hope the courage of these three drivers are a reminder that you can face down a wall street company and if you don't blink you can win for the workers."

The ruling was issued on Friday, July 13, 2018 and was first reported yesterday evening by Politico.

The New York State Unemployment Appeal Board found that Uber exerted control over drivers and acted as an employer based on criteria including:

  • Uber assigns work by dispatching drivers through the App

  • Uber sets the fare rates and collects the fares from passengers; and 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 

  • Uber monitors drivers' acceleration, breaking, speed, and routes driven while on the app

The NYS Unemployment Insurance Appeal Board ruled [bolding added for emphasis]:

"The credible evidence establishes that Uber exercises sufficient supervision, direction or control over the three claimants and other similarly situated Drivers... Uber also exercises control through its Driver App. Uber provides the Driver App and 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. Uber assigns the work by dispatching trip requests to the closest individual Driver who must accept the dispatch within Uber's 15-second mandate..." (pg. 8)

Click here to read the complete ruling.

Drivers invest in vehicles and then are forced out of work when bonuses dry up and their incomes plummet. One of the drivers who won employee status,  Jeffrey Shepherd, qualified for unemployment benefits because he earned too little to survive, sometimes bringing home as little as a penny in income after Uber took car leasing expenses out of his paychecks.

"I'm just happy that no one else will have to go through the struggle that I went through," said Jeffrey Shepherd, NYTWA member and one of the three former Uber drivers found to be employees of the company. "When I started driving for Uber, I thought I would be able to make a living wage. Instead, I was stuck in a predatory car leasing agreement with insurmountable debt, working just to make car payments with nothing left over for food or rent no matter how many hours I worked. Now, if other Uber drivers find themselves in a similar situation, not making enough to get by, they can get unemployment insurance instead of having to fight like I did. That means they'll be able to feed their families and pay their bills."

According to a recent study commissioned by the Taxi and Limousine Commission, 85 percent of New York City drivers earn below minimum wage after expenses and more than one quarter of all new drivers leave within their first year.

If Uber is forced to pay into unemployment benefit funds it may have to reexamine its practice of "deactivating" drivers who receive ratings below 4.5 and refusing to guarantee a living wage for drivers. Being unable to cover basic living expenses is grounds for filing for unemployment benefits.  

When drivers are forced to quit due to poverty incomes, they fall into an abyss. Now there is a legal precedent to win unemployment benefits, creating a safety net for the first time for Uber drivers.

"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." 

Sarah Dranoff, Director of the Workers' Rights and Benefits Unit at Brooklyn Legal Services (a program of Legal Services NYC) said: "This is a groundbreaking ruling. We now have an official position expressed by the state of New York that these drivers were employees of Uber - a position that the state will have to defend if Uber appeals. The case sets a significant legal precedent because it applies not just to the three Uber drivers in question but to others similarly situated." 

What happens if Uber appeals: 

If Uber appeals, Brooklyn Legal Services (a project of Legal Services NYC) and NYTWA will be defending the case alongside the NYS Attorney General, since the NYS Government's official position is that these drivers and those similarly situated are employees.

The case would go straight to the Appellate Division of the New York Supreme Court. Upon review, the Court's role is not to consider whether or not it believes the drivers were employees under the applicable legal test, but whether there was substantial evidence for the Unemployment Insurance Appeal Board to do so.  

Timeline of NYTWA Uber Driver Member UI Cases: 

The drivers and their attorneys had a long battle before triumphing. They first had to sue the Governor in federal court to have the claims investigated by the Department of Labor - a seemingly politically motivated hold on emergency benefits for workers that coincided with Uber's multi-million-dollar lobbying efforts in Albany for a state-wide deregulation bill.

Former Uber driver Levon Aleksanian applied for Unemployment Insurance in September of 2015. He hadn't gotten a response by June 2016, which was unusual as these cases usually move quickly in order to provide emergency financial benefits. Brooklyn Legal Services (a program of Legal Services NYC) filed a federal lawsuit on behalf of the New York Taxi Workers Alliance andLevon Aleksanian, along with another NYTWA Uber driver member, Jakir Hossain, complaining that the New York State Department of Labor was refusing to investigate claims for unemployment benefits by Uber drivers.

In the lawsuit the plaintiffs outlined the delays by the Department of Labor. In one email, which is quoted in the federal complaint at paragraph 58, on p. 14, a Department of Labor employee wrote, "The information we are being given is these claims (not just yours) are under executive review, which means the Dept of Labor is not making the decision whether or not this employment is covered." The email was, according to The New York Times, "hinting at possible intervention by the governor's office."

In 2016 the NYS Department of Labor found three of NYTWA's Uber driver members, Levon AleksanianJakir Hossain (who was also found to be an employee of Lyft), and Jeffrey Shepherd, and any other individuals similarly situated to be employees for the purposes of unemployment benefits. Uber appealed and an Administrative Law Judge held combined hearings for the three drivers. On June 9, 2017, the Administrative Law Judge overruled Uber's appeal. On June 29, 2017, Uber appealed the decision to the Unemployment Insurance Appeal Board. 

The Appeal Board held hearings over the past year with the NYS DOL now arguing on the side of the drivers, who were represented by Brooklyn Legal Services and NYTWA's staff attorney, against Uber. It is extremely unusual for the Appeal Board to hold supplemental hearings, and they did so largely at Uber's behest.  However, after 11 months and several additional hearings, on May 31, 2018, Uber made an 11th hour attempt to withdraw their appeal when it became clear that the company was going to lose. 

On July 12, 2018, the Appeal Board rejected Uber's attempt to withdraw and issued a decision finding these three former Uber drivers and all those similarly situated to be employees of Uber for the purposes of unemployment insurance. It is now the final position of New York State that these drivers and those similarly situated were employees of Uber. 

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NYTWA Responds to July 2nd TLC Report & Recommendations