SAN FRANCISCO – In yet another example of how the legal system hasn't yet decided whether gig-economy workers are employees or independent contractors, the New York State Department of Labor has ruled two Uber drivers are eligible for unemployment CKbenefits but four others aren't.
Overall, say legal experts, the New York rulings don't set legal precedent because jobless benefits are determined on a case-by-case basis and at the state level.
However, “in an increasing number of these cases, drivers are being deemed workers, which means the state analysis as to whether they are employees or contractors is leaning in the direction of employees,” said Veena Dubal,a law professor at the University of California Hastings College of Law.
The New York Timesfirst reported the case of the two drivers on Wednesday. The drivers received the rulings in August and September from the New York State Department of Labor.
On Thursday Uber told USA TODAY that four other drivers who had also applied for unemployment benefits in New York state were found not to be eligible. The company plans to appeal the rulings for the two who were, it said.
In a statement, Uber said that its drivers don’t want to be employees because they would lose the personal flexibility of being contract workers, which they value most.
Uber said that in 13 states where drivers have applied for unemployment, labor boards have ruled that they were not eligible because they were deemed to be independent contractors.
Beyond the two drivers in New York and one case in California, it is not known in how many cases drivers have been deemed eligible for unemployment.
The door is still open
There are different tests for when a worker is considered an employee and the answer can vary by what's being requested. For example, a person could be determined to be an employee for unemployment purposes but not under the National Labor Relations Act, which governs the right to bargain collectively, said Dubal, who studies the evolution of gig economy law.
The bar is lower for unemployment compensation, said Cynthia Augello, a labor and employment partner with the New York law firm Cullen and Dykman.
However, she said the finding that in at least some cases drivers are employees "leaves the door open" for them to be considered employees in other aspects as well.
If they were not employees for unemployment purpose, it would be much more difficult to claim they were for the purposes of collective bargaining or to form unions, she said.
That ability is clearly "the key thing Uber wants to fend off,” Dubal said.
The gig economy business model allows companies such as Uber, Lyft and others to manage large contingents of people doing jobs without having to deal with the traditional expenses of employee-heavy businesses. That has allowed such companies to proliferate and prosper.
At the same time, workers’ rights advocates say the companies make money by side-stepping the protections long granted U.S. employees.
No definitive ruling has been handed down that settles once and for all whether such workers are employees or contract workers.
Recent cases in California make such an overarching ruling unlikely. Courts have found that the vast majority of Uber drivers must abide by arbitration clauses in their contracts with the ride-hailing company and therefore can not be considered a class and enter into class action suits against Uber.
At this point, if a challenge to the gig economy business model is coming “it’s going to come from the federal government, either by way of the IRS, which has a very significant interest in the issue because of employment taxes, or the National Labor Relations Board,” said Jim Evans, a partner in the labor and employment group at the law firm of Alston & Bird’s in Los Angeles
The direction the federal government chooses to take on this will be determined by which candidate is elected to the presidency come November and thus any movement is unlikely until after that, Evans said.