Uber hits another roadblock

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Uber, the ridesharing behemoth that recently began operating driverless cars and exploring self-flying drone taxis, can’t seem to catch a break these days in the legal arena. The New York State Department of Labor has ruled that two Uber drivers, Jakir Hossain and Levon Alesanian, are indeed employees — not contractors —  and therefore eligible to receive unemployment benefits, the New York Times reports. Now, Hossain and Alesanian are eligible for weekly unemployment payments of up to $425 each.

Back in July, the New York Taxi Workers Alliance sued the state on behalf of the two drivers for refusing to “investigate or adjudicate complaints for unemployment insurance benefits.” Hossain and Alesanian had filed for unemployment after getting deactivated from Uber’s platform, but their applications were not being reviewed for months. This ruling only applies to the two drivers, but now the NYTWA is seeking a “comprehensive audit” of Uber.

“I think this is a game-changer,” NYTWA Executive Director Bhairavi Desai said at a press conference today. “Uber has depended on the political structure turning a blind eye. What these decisions do is force a microscopic review.”

The hopes is that Uber would be forced to make all of its drivers employees. If that happens, Uber would suffer a hit on its bottom line. Some of the differences between independent contractors and W-2 employees are that employees are eligible for minimum wage, workers’ compensation insurance and other protections, while contractors are not. Employers also have to “withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee,” according to the Internal Revenue Service. For employees, W-2 status gives them access to training programs and, more importantly, benefits like overtime, or reimbursement for gas and other car expenses. In short, that means it would be more costly to Uber if it had to offer W-2 employment to its drivers.

“Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss,” an Uber spokesperson said in a statement. “Drivers use Uber on their own terms; they control their use of the app along with where and when they drive.  As employees, drivers would lose the personal flexibility they value most — they would have set shifts, earn a fixed hourly wage, and be unable to use other ridesharing apps. While the Department of Labor has ruled that several drivers are independent contractors, we have appealed the other determinations.”

But this is just the latest in a series of legal woes the company has been facing. Uber’s battling a nationwide class-action lawsuit that aims to achieve employee status for drivers. Meanwhile, back in August, a San Francisco judge rejected a $100 million settlement Uber had reached over their employment categorizations for drivers in California and Massachusetts.