Oakland resident Cherri Murphy, 53, has spent three years driving full time for Lyft in addition to her volunteer work as a social justice minister. When the coronavirus pandemic hit, “I was forced to make a decision: Do something that could kill me, or pay my bills?”
She stopped driving in March because of the risk of contracting the coronavirus and immediately applied for unemployment benefits. The California Employment Development Department sent her an award letter showing what she is entitled to: zero dollars.
Because Lyft and Uber classify drivers as contractors, they don’t report their wages to EDD and don’t pay into the state unemployment fund. Until recently, gig workers were not entitled to unemployment benefits. In late April EDD created a way for gig workers and other self-employed people to apply for the new federally funded Pandemic Unemployment Assistance program, which Congress created to respond to the crisis. As of Thursday, 882,760 Californians had applied for PUA.
But Murphy is adamant that she is an employee under AB5, California’s gig work law that took effect Jan. 1, and thus should receive regular unemployment, not the PUA for gig workers.
“I deserve the same amount of benefits (as an employee); I deserve to be protected,” she said. So she asked EDD for a wage investigation, even though that means a decision — and any money — could take months. Meanwhile, her social justice and faith communities are financially supporting her, she said.
Murphy is among activists, lawyers and drivers, including many from Rideshare Drivers United, an organizing group of about 17,000 California drivers, who want Uber and Lyft drivers to receive regular unemployment as employees, not gig workers.
They say the benefits could add up to more and last longer. More importantly, said Keith Eberl, a Los Angeles Uber and Lyft driver, “It’s the principle of the thing: We want to hold Uber and Lyft accountable.”
But Uber and Lyft, as well as the campaign committee behind their $110 million ballot measure that seeks to exempt drivers and couriers from AB5, say the activists’ arguments don’t hold water. They said drivers might get fewer benefits and longer waits by filing as employees. And they point to independent surveys that about 71% of drivers nationwide prefer to be independent contractors (albeit with the caveat that most want to set their own rates, which Uber and Lyft do not allow).
“We agree that EDD should work quickly to get drivers the relief they’re entitled to,” Lyft said in a statement. “But forcing an employment model on drivers who don’t want it would have dangerous economic consequences.”
In the larger picture, Lyft said, if drivers were employees, far fewer would have work. It referred to a study the campaign commissioned that said the five gig companies behind the measure, which also include DoorDash, Instacart and Postmates, would hire only about 10% to 20% of their current 1 million California drivers and couriers if they were employees.
On the other side of the argument, legal advocates and labor groups last week wrote to California Labor Secretary Julie Su to point out an inconsistency. California’s attorney general, along with the city attorneys of San Francisco, Los Angeles and San Diego, sued Uber and Lyft last month, saying drivers should be employees under AB5. Meanwhile, EDD, a state agency, does not treat drivers as employees, they wrote.
By telling drivers to seek PUA benefits, EDD “effectively validates and rewards (Uber’s and Lyft’s) blatant business strategy to conduct business outside the law with a government subsidy and shortchanges the workers,” the letter said. The authors want the agency to change how it handles unemployment claims by gig workers who say they are misclassified.
The state agencies in question said they are addressing who’s a gig worker versus an employee, but did not give any details.
“California has been a national leader in the fight against widespread and systematic employer misclassification,” said the Labor & Workforce Development Agency.
“Workers who believe they have been misclassified as an independent contractor and actually earned wages as an employee are encouraged to file a claim for regular unemployment benefits,” said EDD spokeswoman Loree Levy in an email that used identical language to a letter that Su, the labor secretary, sent to legislators last month.
EDD will investigate and request information from the claimant and the employer, Levee and Su said, but this process can take longer than the three-week average for regular unemployment claims.
“EDD has requested such wage data in bulk (from companies) in some instances in an effort to expedite these claims,” Levy and Su said. Levy would not say whether those companies include Uber and Lyft because of confidentiality laws.
“In addition, like all claimants, app-based drivers are able to apply for PUA if they do not have monetary eligibility for UI based on employer-reported wages in the base wage file,” both Su and Levy wrote.
Stacey Wells, a spokeswoman for the Uber/Lyft/DoorDash ballot campaign, reacted to Su’s wording. “That phrase is a nice dance to try and avoid igniting any wrath from labor,” she wrote in an email. “The companies don’t report wages to EDD because drivers aren’t employees.”
Uber said it has online guides in all 50 states to help drivers apply for PUA. “Congress fully funded pandemic unemployment assistance for gig workers so that every state, many of which face historic deficits, could give these workers immediate financial support at no cost to their own state funds,” Uber said in a statement.
Here’s a breakdown on issues in weighing regular unemployment versus PUA:
Amounts: Regular unemployment is based on gross earnings, while PUA is based on net earnings. That could make a big difference in weekly benefits. (The same is true for other self-employed folks, who often rack up many deductions to reduce their tax bill.)
“For a lot of drivers, net earnings when you deduct all the expenses ends up being much lower, so their weekly benefit amount could potentially be lower,” said Carole Vigne, staff attorney at Legal Aid at Work, which signed the letter to Su.
Eberl, the Los Angeles driver, said his net earnings, after subtracting tens of thousands for gas, maintenance, insurance, Uber and Lyft’s commissions, were less than half of his gross earnings.
He spent weeks calling and emailing EDD to insist on an audit of his claim. Eventually, EDD did what it calls a tax audit, and awarded him regular unemployment, dating back to his original filing date of March 22. Since it was based on his gross earnings, he got the maximum amount of $450 a week, plus the extra $600 a week.
Through Rideshare Drivers United, he’s consulted with other drivers who also want regular unemployment and ran into similar roadblocks, he said. Eberl said EDD staffers were rude and even hung up on him when he insisted that he was an employee of Uber and Lyft.
To get regular unemployment, “our claims have to be referred to (a wage investigation) by a claim processor, the folks who answer our phone calls, and receive our mail and e-mails,” he said. “Those people have been obstructing our path by not offering referral as an option, refusing to refer our claims when we ask them to, trying to push us into applying for PUA, which can pay much less, or just hanging up on us. … It is really galling to have state employees wrongfully deny us access to our right to unemployment insurance benefits.”
Benefit minimum: PUA has a higher weekly minimum ($167) than regular unemployment ($40). Both benefits include an additional $600 a week until July 31. For someone who made less than $4,316 in their highest earning quarter, PUA would provide more weekly money.
Speed to receive benefits: Regular unemployment takes about three weeks to process. Appeals for gig workers who want to receive regular unemployment can take much longer. PUA claims are processed in a few days. “Especially for people who are getting desperate — and many people are — PUA becomes much more appealing if it’s the faster option,” Vigne said.
Length of benefits: PUA provides up to 39 weeks of benefits and ends on Dec. 31 unless Congress extends it. Regular unemployment in California is now 52 weeks — 26 weeks of regular benefits, 13 weeks under Pandemic Emergency Unemployment Compensation, and another 13 weeks under extended benefits, a federal program for states with high unemployment rates.
Returning to work: For employees, returning to work is out of their control: It depends on an employer rehiring them or ending a furlough. By contrast, gig workers can decide for themselves when to stop working, start up and again and which companies to work with, Lyft said. Ride-hailing demand has plummeted during stay-at-home orders, which would limit earnings. However, independent contractors can readily switch to other gigs such as delivering meals, groceries or other items, and can work for multiple companies, Lyft said.
Multiple jobs: About four-fifths of Uber and Lyft drivers put in less than 20 hours a week, the companies said. That implies that many have other jobs, either as freelancers or employees. People with more than one W-2 (regular employment) job can add together multiple salaries to calculate their base income. Getting unemployment’s maximum $450 a week requires making at least $11,674 in one’s highest earning quarter.
Benefits for people with hybrid income — some freelance, some regular employment — are based only on W-2 (regular employment) income under federal law. Such people would benefit by being able to count Uber/Lyft income as regular employment “so they can get as much income into their base period as possible,” Vigne said.
Who pays? The federal government is picking up the tab for PUA. Regular unemployment is paid for by a tax employers must pay on workers’ income. With a deluge of pandemic claims, California already exhausted its unemployment fund and had to get an infusion of federal money.
A report by the UC Berkeley Labor Center, which has been vocal in its belief that drivers should be employees, said that Uber and Lyft would have had to pay $413 million into the state unemployment insurance fund from 2014 to 2019 if their drivers had been employees.
But the companies retorted that the study was based on a false premise. If drivers were employees, they would have had far fewer of them, they said.
How to decide? “People should do what they think is the right approach for them” in deciding which to pursue, said Michael Bernick, an attorney with Duane Morris and a former head of EDD, who was hired by the ballot campaign to give a webinar and other info to drivers on filing for unemployment. “EDD looks into each claim on an individual basis. It’s clear that if you file for PUA, it moves very quickly.”
But, he said, EDD, is an administrator, not a judicial or legislative body, so needs guidance on policy issues such as classifications.
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I am an Italian chef turned Texas BBQ expert. My journey started at Franklin BBQ in Austin, TX where I ate my first ever brisket. This experience would later change my whole life and cooking style.
I began cooking barbecue at Kerlin BBQ, where Pitmaster Bill Kerlin (nominated for Best BBQ in the U.S.) taught me everything I needed to know about smoking meats. After intense two years living in a trailer next to a pit, I began collaborations in Italy and the U.S. with different barbecue venues.
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