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California Gig Workers Among the Last to Get Job-Loss Checks

March 24, 2020, 6:56 PM

Gig-economy workers in California are facing difficulties getting unemployment checks as the coronavirus pandemic slashes hours, despite a new law intended to make them eligible for employee benefits.

Many workers of app-based platforms like Uber Technologies Inc., Lyft Inc., and Doordash are likely considered employees as of Jan. 1 under Assembly Bill 5. The 2019 law set a more stringent standard for classifying workers as independent contractors rather than employees.

But the flood of claims that come with Covid-19 layoffs means app-based drivers will be among the last to receive aid, according to California’s Legislative Analyst’s Office, an independent adviser to the state legislature.

“The lion’s share of the delay, as we understand it, will be in simply administering the claim, confirming with the employer that the worker had worked there,” said Chas Alamo, a policy analyst with the office. He said he couldn’t say how long the delay would be.

In normal circumstances, workers receive their checks within 21 days of their application. But gig workers who were previously considered independent contractors under the old standard may not yet be on their employer’s payroll.

The state’s Employment Development Department (EDD) received close to 106,000 unemployment claims daily on average over the last week, Gov. Gavin Newsom (D) said Monday in a press conference. That’s compared with 2,500 per week before the Covid-19 outbreak.

Funding Influx

In a report, Alamo suggests that drivers provide EDD with documentation of earnings from the companies that hire them when making their claims.

EDD could take steps to streamline operations and get unemployment checks out more quickly, Alamo said. One possibility would be to temporarily cease debt collection from employers who didn’t pay for their workers’ unemployment insurance. This would redirect staff to work on processing the jobless claims.

The department was already expecting a flood of new claims due to A.B. 5. Newsom’s proposed budget from January set aside $3.4 million for EDD to administer the three-part test of whether someone is a contractor, and would create 25 new positions. Overall, the administration estimates it will take $21.6 million estimate to enforce A.B. 5.

In addition, California will get about $150 million via the recently-signed federal coronavirus aid package (H.R. 6201) to help the state administer unemployment benefits.

Assemblymember Lorena Gonzalez (D), the author of A.B. 5, sent a letter to EDD last week asking the agency to provide unemployment insurance to workers misclassified as independent contractors.

Companies like Uber and Lyft have opposed A.B. 5 since its passage, saying that an employee structure doesn’t make sense for their platform, which provides money-making opportunities for those seeking a flexible work arrangement.

Under the new law, those companies could be on the hook if they don’t provide benefits for workers that the state government considers employees. If a Covid-19-afflicted driver files an unemployment claim, it could unleash an investigation into whether a worker is really a contractor, said Cheryl Sabnis, an employment attorney with King & Spalding LLP in San Francisco.

Those who remain independent contractors under the new test could get federal Disaster Unemployment Assistance for self-employed workers, although President Donald Trump’s disaster declaration for California has yet to trigger that assistance.

To contact the reporter on this story: Tiffany Stecker in Sacramento, Calif. at tstecker@bgov.com

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