Judge Orders N.Y. to Pay Uber, Lyft Drivers Unemployment Benefits

This week, a Brooklyn federal judge granted a preliminary injunction requested by app-based for-hire-vehicle (FHV) driver plaintiffs and the New York Taxi Workers Alliance (NYTWA) against New York’s Department of Labor (NYDOL), Gov. Andrew Cuomo, and the state’s Commissioner of Labor, Roberta Reardon. In a 27-page opinion, the court sided with the driver plaintiffs finding that they had established the prerequisites for a preliminary injunction in the face of NYDOL’s “denial or delay of unemployment benefits.”

The case began on May 25, when the plaintiffs filed a complaint claiming the state’s failure to pay unemployment insurance (UI) benefits “when due” violated Title III of the Social Security Act and the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution. In Tuesday’s order, Judge LaShann DeArcy Hall acknowledged that the case arises during an especially trying time, commenting that “workers across the nation have faced layoffs and furloughs at numbers rivaling those during the Great Depression.”

In finding that an injunction was necessary to prevent irreparable harm, the court wrote that “when the outright denial or undue delay in the provision of subsistence benefits is at issue, courts have not hesitated to utilize the extraordinary remedy of preliminary injunctive relief,” and cited examples. The court determined that the plaintiffs had demonstrated extreme urgency, reasoning that “[w]ithout unemployment insurance benefits, Individual Plaintiffs and other app-based FHV members of NYTWA will be unable to meet their basic needs including, among other things, paying for groceries, housing, car insurance, and phone bills.”

The court also noted that its decision was not eroded by the fact that the plaintiffs may also receive benefits pursuant to Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation (FPUC), because “in many instances PUA serves to fill the gap for those denied unemployment insurance benefits… and FPUC does not act as a remedy at all.”

The court agreed that the plaintiffs were likely to succeed on the merits of their arguments. It wrote, “[t]he evidence from Individual Plaintiffs alone—putting aside the other approximately 10,000 app-based members of NYTWA—is convincing.”

The court chided the NYDOL for its narrow UI application review process, but recognized that the “NYDOL may be hamstrung by the conduct of app-based FHV companies in its effort to obtain wage and earnings data universally,” alluding to the fact that Lyft and Uber are not required to and do not supply drivers’ earnings information to the NYDOL. However, the court found it unacceptable that this impediment resulted in the delay of unemployment benefits that drivers experienced. The court pointed out that the NYDOL had other means of obtaining drivers’ earnings information for benefit eligibility, like through their submission of 1099 and 1040 tax forms.

In the final prong of its analysis, the court again sided with the plaintiffs, finding that a preliminary injunction was in the public interest. The court batted down the defendants’ “only argument advanced on this point[,] [] that [in] the current economic climate it would be imprudent to dedicate resources to providing preliminary relief requested by Plaintiffs.” It held that “[t]o the contrary, it is precisely because of the current economic climate that such immediate relief is demanded.”

The decision is the latest in a sequence recognizing independent contractors as employees for purposes of unemployment benefits. A March 30 decision by the New York Court of Appeals similarly held that couriers of Postmates, the food delivery service, were employees and therefore eligible for unemployment benefits during the COVID-19 pandemic.