Due to the COVID-19 pandemic, on advice of healthcare officials and sometimes, mandated by governments, people throughout the world are locking down and traveling less.  The global outbreak of COVID-19 has been affecting nearly every industry.  One group of people who have been uniquely affected are workers in the “gig economy” like rideshare drivers and food deliverers.[1]  Because of the significant decrease in travel, rideshare drivers, who work for companies like Uber and Lyft, have not been able to book as many rides.[2]  Further, because of their large exposure to the public, some rideshare workers have begun to choose to stay home due to fears for their health.[3]  For example, a Lyft driver interviewed by the New York Times stopped driving recently, saying, “I won’t risk it.  The virus is airborne, and I had three or four people last week coughing.”[4] These factors have led to significantly decreased earnings for rideshare workers.

These rideshare drivers’ fears are amplified by the fact that rideshare companies like Uber and Lyft have long considered their respective rideshare drivers to fall under the category of independent contractors.[5]  Traditionally, however, unemployment benefits and sick leave are only given to workers who are classified as employees.[6]  This classification, plus the rapidly changing economic landscape, had left some rideshare drivers concerned about their own financial stability.[7] 

The determination of who constitutes an employee versus an independent contractor for the purpose of unemployment benefits occurs at the state level.[8]  California recently passed California Assembly Bill 5 (AB5) which codified the decision of the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court.[9]  This decision and resultant statute shifted the burden onto companies like Uber and Lyft to prove that their drivers should be classified as independent contractors.[10]  Additionally, the Dynamex decision and AB5 also set forth a three-prong test for the distinction of independent contractors and employees, which tends to favor the classification of workers as employees rather than independent contractors.[11]  However, even after these exacting standards, Uber has consistently stated that, in their view, their drivers still constitute independent contractors.[12]  Thus, if Uber’s classification holds true, those drivers would not be able collect unemployment benefits, because unemployment benefits are typically only given to workers who qualify as employees, not independent contractors.[13]

On Friday, March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES) into law.[14]  Among other things, the act provides for significant unemployment benefits and relief to workers affected by the COVID-19 pandemic.[15]  With CARES, rideshare drivers and other gig workers can breathe a sigh of relief, because the CARES Act takes measures to ensure that workers in the gig economy are eligible to receive unemployment benefits.[16]  In addition to rideshare drivers, other workers in the gig economy, like food deliverers, Airbnb hosts and other freelancers will be compensated through CARES.[17]  The exact amount of compensation provided depends on state unemployment laws.[18] 

In fact, technology companies, like Uber itself, actually lobbied for the inclusion of gig economy workers in the relief measures.[19]  Uber CEO Dara Khosrowshahi wrote to President Trump asking “for support for the independent workers on our platform and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward.”[20]  Senator and minority leader Chuck Schumer dubbed the inclusion of gig workers in CARES “dramatic and historic expansion” of rights for workers in non-traditional employment models.[21]   

On the other side of things, by advocating for the necessity of a safety net for its workers now, Uber may undermine their persistent argument that their workers are not employees.  Uber has historically argued that their drivers are not employees because, among other things, their drivers may have other sources of income and operate on their own schedule.[22]  Therefore, says Uber, the drivers should not be considered employees and should not be afforded benefits like paid sick leave and unemployment pay.[23]  Now, however, in highlighting the need for a safety net in the face of COVID-19, Uber begs the question: Why wouldn’t these drivers need or deserve this safety net in ordinary times?



[1] https://www.nytimes.com/2020/03/24/business/economy/coronavirus-uber-lyft-drivers-unemployment.html?searchResultPosition=2; https://www.nytimes.com/2020/03/18/technology/gig-economy-pandemic.html

[2] https://www.nytimes.com/2020/03/24/business/economy/coronavirus-uber-lyft-drivers-unemployment.html?searchResultPosition=2; https://www.nytimes.com/2020/03/18/technology/gig-economy-pandemic.html

[3] https://www.nytimes.com/2020/03/24/business/economy/coronavirus-uber-lyft-drivers-unemployment.html?searchResultPosition=2

[4] Id.

[5] https://www.nytimes.com/2019/09/12/technology/uber-drivers-california.html; https://www.sfchronicle.com/business/article/Will-Uber-s-ride-changes-thwart-AB5-gig-work-15041528.php; https://www.nytimes.com/2020/03/18/technology/gig-economy-pandemic.html

[6] https://www.nytimes.com/2019/09/12/technology/uber-drivers-california.html;

[7] Id; https://www.nytimes.com/2020/03/24/business/economy/coronavirus-uber-lyft-drivers-unemployment.html?searchResultPosition=2; https://www.nytimes.com/2020/03/18/technology/gig-economy-pandemic.html

[8] https://www.nytimes.com/2020/03/18/technology/gig-economy-pandemic.html

[9] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5

[10] Id.; Dynamex Operations West, Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018). 

[11] Id.

[12] https://www.sfchronicle.com/business/article/Will-Uber-s-ride-changes-thwart-AB5-gig-work-15041528.php; https://www.ft.com/content/f0c96348-cb7d-47b8-a88d-1292fa95a03a; https://fortune.com/2020/03/26/coronavirus-stimulus-package-independent-contractors-gig-economy-unemployment-benefits-uber-lyft-drivers/

[13] https://www.nytimes.com/2020/03/24/business/economy/coronavirus-uber-lyft-drivers-unemployment.html?searchResultPosition=2

[14] https://www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] https://fortune.com/2020/03/26/coronavirus-stimulus-package-independent-contractors-gig-economy-unemployment-benefits-uber-lyft-drivers/

[20] https://www.ft.com/content/f0c96348-cb7d-47b8-a88d-1292fa95a03a

[21] Id.

[22] https://www.nytimes.com/2019/09/12/technology/uber-drivers-california.html; https://fortune.com/2020/03/26/coronavirus-stimulus-package-independent-contractors-gig-economy-unemployment-benefits-uber-lyft-drivers/; https://fortune.com/2020/03/26/coronavirus-stimulus-package-independent-contractors-gig-economy-unemployment-benefits-uber-lyft-drivers/

[23] https://www.nytimes.com/2019/09/12/technology/uber-drivers-california.html; https://www.sfchronicle.com/business/article/Will-Uber-s-ride-changes-thwart-AB5-gig-work-15041528.php