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ANALYSIS: Crisis May Inch Gig Drivers Closer to Employee Status

April 2, 2020, 9:29 AM

Covid-19 may be shutting down almost everything, but doors continue to open for gig drivers in their employee classification fight, due to recent events both inside and outside the courtroom.

Increased demand for gig workers’ services, recent court decisions, and Covid-19-related actions taken by gig employers all might have an impact on the long-term success of gig workers’ efforts to attain employee status and benefits.

Increased Demand

With each passing day of the Covid-19 crisis, consumers are becoming more dependent on gig workers—especially those delivering food and other goods. Instacart and Amazon drivers are delivering more groceries than ever before. DoorDash and UberEats are providing key services for restaurants struggling to survive. Postmates, Amazon, and other delivery services are seeing increased orders as consumers avoid going to stores to purchase goods.

The fact that these drivers are becoming more essential, both to consumers and the companies they drive for, may give these drivers more bargaining power, at least in the short term. Some gig workers, such as those for Instacart, have attempted to use strikes to improve their working conditions.

Whether this Covid-19 surge in demand will have a long-term impact remains to be seen. Increased demand for their services weighs in favor of drivers, but the increased demand corresponds with record unemployment levels providing a ready influx of workers who would be happy to have a paying job at all, regardless of whether they were classified as employees or independent contractors. However, the more companies like Instacart do to protect their drivers—such as providing them with hand sanitizer and protective equipment—the more drivers may look like employees in the eyes of state worker classification tests. This leaves companies in a tough spot as they navigate the next few months and may play out in favor of drivers.

Recent Court Decisions

Gig drivers have been fighting for years in court about whether they are properly classified as employees or independent contractors. Companies largely won in the beginning by successfully driving many class actions surrounding this issue into arbitration. But this trend changed after the Supreme Court issued its 2019 decision in New Prime v. Oliveira, which helped drivers avoid arbitration and keep the fight in court.

Two recent judicial decisions have signaled that this pro-driver trend is continuing. On March 26, the New York Court of Appeals held that drivers for Postmates should be considered employees, not independent contractors, for the purpose of unemployment benefits because Postmates exercises more than “incidental control” over the drivers. This decision obligates Postmates to pay into New York’s Unemployment Insurance Fund for each employee. Although the employee-classification test varies by state, and this decision is not controlling outside of New York, this decision will help prop up the arguments being made by gig drivers across the country.

The following day, the U.S. District Court for the District of Massachusetts issued one of the most sweeping decisions yet to help ride-share drivers get out from under their arbitration agreements (and thus fight the classification battle in court). Companies like Uber and Lyft have been arguing that transporting people, as opposed to goods, in interstate commerce is not sufficient to qualify a driver under the interstate transportation worker exemption to the Federal Arbitration Act (FAA). Some courts have agreed, but even those that disagreed have focused on whether the plaintiff had personally transported passengers across state lines.

Last week, however, the Massachusetts district court stated that the “critical question” is whether the driver transports “passengers that travel interstate”—i.e., does the driver take people to airports or otherwise transport passengers “who themselves are continuing in the flow of interstate commerce.” This is a much broader reading of the interstate transportation worker exemption to the FAA, as it focuses on the passenger’s travels rather than whether the driver actually crossed a state line, and one that drivers likely will cite in other pending cases.

The court is also reviewing an emergency motion for a preliminary injunction filed in the same case that seeks to enjoin Lyft from classifying its drivers as independent contractors in a class-action attempt to get drivers sick leave under Massachusetts law.

Company Responses to Covid-19

Finally, the same companies that have been fighting employee status and the associated employee benefits at every turn recently took steps that could undermine their future arguments.

Last week, Uber’s CEO sent a letter to the White House and Congress asking for Uber drivers to be included in the Coronavirus Stimulus package, as many ride-share drivers have seen their incomes plummet with people largely staying home. This request has been seen by some as taking the exact opposite position that Uber and others have taken in the past—i.e., that drivers need protections like unemployment benefits.

Drivers will likely argue that these companies are happy to side with drivers when the government, and not the company, is footing the bill. Uber’s and others’ position during this crisis will likely give future plaintiffs a stronger leg to stand on in their fight for employee status and benefits, and citations to Uber’s letter are likely to appear in many future court filings and legislative proceedings.

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