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New York Uber and Lyft drivers win key battle over unpaid unemployment benefits

A federal judge on Tuesday ruled in favor of a group of New York...

Posted: Jul 29, 2020 10:44 AM

A federal judge on Tuesday ruled in favor of a group of New York Uber and Lyft drivers who sued the state for taking too long to send their unemployment checks.

It's the latest development in a long labor rights battle between so-called gig workers seeking to be classified as employees to secure benefits such as employer-funded health care and sick leave. Many tech companies, including Uber and Lyft, argue that their workers are independent contractors.

Court records show the New York drivers — MD Islam, Doh Oattara, Abdul Rumon and Harnek Singh — filed for unemployment in March to avoid catching coronavirus on the job when the city emerged as an early US epicenter of the Covid-19 pandemic.

Judge LaShann DeArcy Hall issued a preliminary injunction in the drivers' favor Tuesday morning. Her ruling requires the State Department of Labor to send the drivers the full unemployment payments they're entitled to while their case proceeds through court.

The New York Taxi Workers Alliance, a labor rights group, filed a lawsuit on the drivers' behalf in May after the state failed to send the drivers the full unemployment payment amount state employees are entitled to.

The NYTWA told CNN Business that lobbyists from Uber and Lyft previously persuaded the state Department of Labor to direct their rideshare drivers to file for federal unemployment benefits designated for independent contractors instead of benefits designated for employees.

The drivers say they have been forced to wait much longer to receive reduced unemployment checks under the federal unemployment program, which uses a workers' net earning to decide their benefit rate instead of the gross rate employees receive. As a result, most Uber and Lyft drivers have been forced to wait 10 weeks to receive the minimum weekly unemployment rate of $180 for independent contractors instead of just three weeks for the maximum rate of $504 a week for employees, according to the NYTWA.

In her ruling, Judge Hall said that the state Department of Labor's denial or delay of unemployment benefits is "sufficient to establish irreparable harm to Plaintiffs."

The Taxi Workers Alliance celebrated the ruling Tuesday afternoon. "We're overjoyed," NYTWA Executive Director Bhairavi Desai told CNN Business. "There's no question that justice has been long delayed, but we're thrilled that it's finally arrived."

A spokesperson from the state Department of Labor said it is "reviewing the decision and considering all of our options."

"Regardless, the Department of Labor has been providing benefits to rideshare drivers in New York and is committed to continuing that support," the spokesperson said.

Uber and Lyft are two of the gig companies that spent a combined $110 million to promote a California ballot initiative known as Prop. 22, which will be on California voters' ballots in November. The measure would reclassify gig-app workers as independent contractors again after state lawmakers passed a law last year requiring the gig companies to recognize their workers as employees.

Uber told CNN Business that its drivers prefer being classified as independent contractors because it allows them to work when they want instead of having a schedule set by their employer. The company also said independent drivers potentially can earn more money without wage limits set by unions and employment laws.

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