New York State Department of Labor Rules Uber Drivers Eligible for Unemployment Insurance


By: Robert Pagan

The New York State Department of Labor has ruled that two former Uber drivers are eligible for unemployment payment, finding that they should be treated as employees rather than independent contractors, as the company has maintained.[1] Uber has made it clear that they believe their driving “partners” fit the definition of independent contractors rather than employees.[2] Uber drivers on the other hand, have rejected this notion, and assert that they are best described as employees.[3] Classification of Uber drivers has plagued the company and its community of drivers for years.

When we left Uber this past August, a federal judge had rejected a proposed $100 million settlement with drivers in California and Massachusetts who claimed they should be classified as employees instead of independent contractors.[4] According to U.S. District Judge Edward Chen, the deal between Uber and its drivers did not compensate the drivers enough.[5]

Unlike contractors, employees are entitled to a variety of rights and protections, including minimum wage and workers compensation insurance.[6] The recent decision by the New York Department of Labor could make it more difficult for Uber, its rival Lyft, and other new businesses operating in what is known as the gig economy by raising their costs and challenging their business model.[7]

The bout began on July 28th, 2016, after the New York Taxi Alliance filed suit on behalf of two former Uber drivers challenging New York State’s refusal to investigate or adjudicate claims for unemployment insurance, effectively denying them access to benefits they need to support themselves and their families while they are unemployed.[8] The plaintiffs—two individual drivers and the New York Taxi Workers Alliance—were represented by Legal Services NYC’s Brooklyn program.[9]

The rulings by the New York State Department of Labor apply only to the drivers’ unemployment insurance claims and do not directly affect other drivers or extend to other protections normally accorded to employees.[10] However, worker advocates say they plan to pressure the state to extend the logic of unemployment rulings to other areas.[11]

“I think this is a game-changer,” said Bhairavi Desai, executive director of the New York Taxi alliance.[12] “Uber has depended on the political structure turning a blind eye. What these decisions do is force a microscopic review of drivers’ employment status by elected officials and government agencies.”[13]

It is not clear how far the advocates will be able to push the ruling. Tiffany Potzer, 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.”

California has deemed at least two Uber drivers eligible for jobless benefits, but has found others to be independent contractors.[14] The determinations have not led Uber to recast its relationship with drivers in the state.[15] Some observers say the debate over whether Uber divers are contractors or employees is ultimately about a much bigger issue: how our social safety net must adapt to changing work trends.[16]

[1] Noam Scheiber, Uber Drivers Ruled Eligible for Jobless Payments in New York State, New York Times (Oct. 12, 2016),

[2] O’Connor v. Uber Techs., No. 13-3826, 2015 U.S. Dist. LEXIS 116482, at *5 (N.D. Cal. 2015).

[3] Id.

[4] Alison Griswold, New York just made the case that two former Uber drivers should be treated as employees, Quartz (Oct. 13, 2016),

[5] Chris Isidore, Judge rejects $100 million settlement between Uber and its drivers, CNN Money (Aug. 19, 2016),

[6] Scheiber, supra note 1.

[7] Id.

[8] Kate Whalen, Former Uber Drivers File Federal Lawsuit against Governor Cuomo and New York State Department of Labor, Legal Services NYC (July 28, 2016),

[9] Id.

[10] Scheiber, supra note 1.

[11] Id.

[12] Id.

[13] Id.

[14] Chris Roberts, UPDATED: Another Uber Driver Awarded Unemployment Benefits, San Francisco Weekly News (Mar. 4, 2016),

[15] Scheiber, supra note 1.

[16] Andrea Peterson, Two Uber drivers are eligible for unemployment payments, New York regulators find, The Washington Post (Oct. 14, 2016),


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