The Covid-19 pandemic has placed a spotlight on the underbelly of the U.S. economy. With many Americans following orders to stay at home, gig workers like delivery workers, truck drivers, and other independent contractors are still going out into the world to work and to keep the world working.
We can only imagine what would have happened to our daily lives without these workers. Just weeks ago, ordering from a company like Postmates, DoorDash, or Instacart could have been considered a luxury. Now, it feels like an essential service.
The $2 trillion economic relief measure, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), includes financial assistance to gig workers. It contains provisions that will allow independent contractors to apply for unemployment insurance, a resource from which they are generally excluded.
CARES Act Implications for Independent Contractors
Many gig workers have been hit hard by the pandemic. Some have tested positive for Covid-19, developing symptoms that have forced them to self-quarantine. But there is another problem. Since gig workers are classified as independent contractors, they lack the same benefits and protections as employees. The drivers for many of these essential services do not have access to company health insurance, sick leave, family leave, or workers’ compensation.
The CARES Act addresses gig workers’ plight and unsurprisingly, many gig economy companies backed the measure. In a letter to President Donald Trump, Uber CEO Dara Khosrowshahi requested that any coronavirus economic stimulus measure “include protections and benefits for independent workers, both those who use Uber and all others across the economy.” His letter then takes a political turn, highlighting a contentious issue that has been brewing across the industry: employment classification.
Khosrowshahi outlines a proposal for a new approach to labor law, one that would revise “the current binary system of employment classification” wherein “a worker is either an employee who is provided significant social benefits or an independent worker who is provided relatively few.” He dubs this approach ‘the third way.’
The Pandemic Unemployment Assistance Program
As one of its many measures, the CARES Act expands unemployment assistance by creating the Pandemic Unemployment Assistance Program (PUA). The program is modeled after a disaster relief program administered by the Federal Emergency Management Agency. It extends unemployment benefit assistance to individuals experiencing unemployment, partial unemployment, or an inability to work as a result of Covid-19. This means that individuals who are not entitled to any other unemployment compensation may receive benefits from the federal government. The weekly benefit amount will be the amount determined under state law, plus an additional $600 until July 31.
The PUA program opens the door for gig workers to access unemployment protections. While there is no official definition of a ‘gig worker’ in state or federal law, the term typically refers to any individual who gets paid per project, per event, or per gig. As independent contractors, gig workers are typically excluded from coverage under state laws concerning unemployment benefits. This is because they operate with a level of autonomy that places them outside a conventional employer-employee relationship.
Gig workers can work on multiple platforms. They work as much or as little as they want. They can dictate when, where, and how often they work. They can also accept or reject any job offers they receive.
By operating outside the employer-employee relationship, gig workers lack access to certain labor protections, including minimum wage laws, anti-discrimination laws, sick leave entitlements, workers’ compensation benefits, and collective bargaining rights. This is why the PUA program is so unique. It provides gig-economy workers with a temporary safe net as independent contractors.
That is to say, gig-economy workers can continue providing those services that have suddenly become essential during the Covid-19 pandemic. They can do this knowing that they have access to workplace protections that will not jeopardize their independence and autonomy as independent contractors.
How Will It Work?
Each state is a little different. In general, though, to be eligible, an independent contractor must provide a self-certification that they have lost work directly because of the Covid-19 pandemic. What does this mean? The Department of Labor has provided guidance, stating that “states should take into account specific circumstances unique to the Covid-19 public emergency.”
To help with this, the DOL has created a non-exhaustive list of qualifying scenarios:
- You have been diagnosed with Covid-19;
- A member of your household has been diagnosed with Covid-19;
- You are providing care for a family member who has been diagnosed with Covid-19;
- You are the primary caregiver for an child who is unable to attend a school that has closed as a direct result of the Covid-19 public health emergency;
- You are unable to access your place of employment because of quarantine;
- Your place of employment is temporarily closed as a direct result of the Covid-19 public health emergency;
- You have had to quit your job because of Covid-19; or
- The Covid-19 public health emergency has severely limited your ability to continue performing your customary work activities or has forced you to suspend such activities.
The DOL also states that claimants must verify that they are not eligible for regular unemployment insurance. Some claimants may need to file for traditional unemployment compensation, receive a rejection letter, and then re-file for Pandemic Unemployment Assistance.
When the dust of the Covid-19 pandemic has finally settled, the PUA program may provide some of the infrastructure for Khosrowshahi’s ‘third way,’ helping to remove the forced choice between flexibility and protection workers must make.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Nicole Clark, a business litigation and labor and employment attorney who has handled litigation in both state and federal courts, is the CEO and co-founder of Trellis Research, a legal analytics platform that uses AI and machine learning to provide litigators with strategic legal intelligence and judicial analytics. She has worked at a variety of law firms ranging from mid-size litigation boutiques to large firms, and has defended corporations and employers in complex class action and wage and hour disputes, as well as individual employment matters ranging from sexual harassment to wrongful termination.