Uber drivers win lawsuit for jobless payments in New York state

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【Summary】The New York State Department of Labor has ruled that two Uber drivers are employees of Uber rather than independent contractors, therefore, they are eligible for jobless benefits, on the other hand, Uber is appealing the determination.

Original Claire    Oct 25, 2016 5:30 PM PT
Uber drivers win lawsuit for jobless payments in New York state
Claire Peng

By Claire Peng

While expanding its business into the ride-hailing market and driverless technology, Uber is facing a series of law-related obstacles. These include its relationship with drivers and their employment benefits. 

According to New York Times,  the New York State Department of Labor has ruled two Uber drivers, Jakir Hossain and Levon Aleksanian, are employees of Uber rather than independent contractors. Therefore, they are eligible for jobless benefits and should receive weekly unemployment payments up to $425 each. 

The two former Uber drivers applied for jobless benefits since Uber deactivated their accounts last year. They waited months for determination about their eligibility. Yet as time passed, they received no definitive result. Usually the process only takes a few weeks. 

"It was a very scary moment," Mr. Aleksanian said of his initial separation in a statement. "Until recently, I didn't have any employment. I was applying continuously every day, but I couldn't find anything."

This past July of 2016, the New York Taxi Workers Alliance sued the state on behalf of the two drivers for refusing to "investigate or adjudicate complaints for unemployment insurance benefits." Then in August and September, each driver finally received what is known as a Monetary Benefit Determination stating they were employees of Uber — a necessary but not sufficient condition for receiving benefits.

"I think this is a game-changer," New York Taxi Workers Alliance (NYTWA) Executive Director Bhairavi Desai said at a press conference. "Uber has depended on the political structure turning a blind eye. What these decisions do is force a microscopic review."

In spite of the ruling result, Uber said it will appeal the determinations.

"Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss," an Uber spokesperson said in a statement. "Drivers use Uber on their own terms; they control their use of the app along with where and when they drive.  As employees, drivers would lose the personal flexibility they value most — they would have set shifts, earn a fixed hourly wage, and be unable to use other ridesharing apps. While the Department of Labor has ruled that several drivers are independent contractors, we have appealed the other determinations."

The conflict is revolving around the definition of "employee" under the changing work categorization, impacted by "gig economy" companies such as Uber and Lyft. Apparently, changing all Uber drivers to employees would be very costly to the company, as that includes minimum wage, workers' compensation insurance and other protections, while contractors are not.

Tiffany Portzer, a spokeswoman for the New York Labor Department, said: "Unemployment determinations are made on a case-by-case basis and, depending on the facts, decisions have been made supporting both drivers as employees and drivers as independent contractors."

The department subsequently granted benefits to Mr. Hossain, who has received them retroactively. But Mr. Aleksanian, who said he ran up thousands of dollars in debt during months of unemployment, has still been denied benefits because of the circumstances of his separation from Uber. He is appealing the decision. 

Meanwhile, the regulator found that Hossain, who received his first unemployment payment last week, was also a Lyft employee. Lyft did not respond to a request for comment, according to Washington Post. 

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