A New York state Department of Labor administrative law judge has ruled that three Uber drivers and others in New York City who are "similarly situated" are considered employees under state law and entitled to unemployment benefits
The ruling by Michelle Burrowes upheld a state labor department decision last year that the ride-hailing giant can't consider its drivers independent contractors, and are required to provide unemployment insurance for the three drivers for an Uber black-car subsidiary, Levon Aleksanian, Jeffrey Shepherd and Jakir Hossain, as well as those who are "similarly situated" in New York City.
Didn't employ an 'arm's length approach'
"Uber did not employ an arm's-length approach to the claimants as would typify an independent contractor arrangement," Burrowes wrote June 9.
"The overriding evidence establishes that Uber exercised sufficient supervision, direction and control over key aspects of the services rendered by the claimants, such that an employer-employee relationship was created. I, conclude, therefore that the claimants and others similarly situated are/were employees of the employer Uber," she continued.
While Burrowes does not define what "similarly situated" individual means in her decisions, Brooklyn Legal Services — which brought the case with the New York Taxi Workers Alliance, a union representing 50,000 taxi drivers — argues that the ruling would apply to all Uber drivers in New York City, as well as the soon-to-be Uber drivers throughout the state.
Decision could reach beyond Uber
But the administrative law judge's decision could reach well beyond Uber Technologies Inc., affecting other ride-hailing companies that employ a similar model, such as Lyft Inc.
The San Francisco-based Uber plans to request a new hearing and to appeal the decision by June 29.
"The DOL and the administrative law judge's decisions, under state labor law, should apply to any drivers across the state if they work under similar levels of supervision, direction and control," said Nicole Salk, a staff attorney at Brooklyn Legal Services. "If, as seems likely, Uber drivers upstate will work under similar conditions as drivers in New York City, then I think it's safe to say that the DOL would reach the same conclusion for upstate drivers."
Ride-hailing apps are expected to begin operating in upstate cities including Buffalo, Albany, Rochester and Syracuse by the end of the month.
Rights and benefits under the law
The executive director of the New York Taxi Workers Alliance, Bhairavi Desai said, "The message here is simple: If you're going to control the workers to maximize your profits off their labor, you owe them their rights and benefits under the law."
She continued: "As the administrative law judge ruled, Uber is responsible for unemployment insurance contributions since Jan. 1, 2014 ,for not only the three claimants, but all other similarly situated drivers."
Uber spokeswoman Alix Anfang said the company was confident it would prevail on appeal.
"The administrative law judge forbid any other drivers from testifying, which means the evidence was drawn from three handpicked drivers represented by a taxi nonprofit that represents only 87 drivers that partner with Uber," she said.
A spokeswoman for Lyft, a competing ride-hailing service, declined to comment on how the decision might affect its business.
Once the appeal board reviews the administrative law judge's ruling and issues its decision, all parties will have 30 days to apply to the appeal board for reconsideration or to appeal to the state Appellate Division.
Battle continues with mixed outcomes
The battle over whether to classify ride-hailing drivers as contractors over employees continues with mixed outcomes.
In April, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a class action by black-car drivers who alleged they were misclassified as contractors instead of employees in violation of the Fair Labor Standards Act and New York State Labor Law in Saleem v. Corporate Transportation Group, 15-cv-88.
The U.S. Department of Labor backed the drivers in the case and said that they should be considered employees.
A state appellate court in Florida ruled in February that Uber drivers are considered to be independent contractors. In Florida, Gov. Rick Scott last month signed legislation that classifies ride-hailing drivers as contractors and pre-empted local ordinances regulating ride-hailing app services.
At least 45 states, including California, Texas and Washington, D.C., have passed some sort of regulation for so-called "gig economy" companies, according to the National Conference of State Legislatures.
Josefa Velasquez can be reached at jvelasquez@alm.com. On Twitter: @J__Velasquez.
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