In California, Illinois, Washington and a slew of other states, local unemployment officials are signaling they aren’t yet ready to start processing aid for laborers in what is known as the gig economy. Already inundated with record numbers of jobless claims and lacking federal guidance, many states say they need more time to set up a new system that can process additional benefits — and some say they may not be able to accept applications until later in April.
Until now, many gig workers were ineligible for traditional unemployment benefits, even if driving passengers or delivering goods was their primary source of income. That’s because they are often categorized as independent contractors, not full-time employees, for companies such as Airbnb, Uber, Lyft and Postmates. Those companies don’t remit payroll taxes to the government on behalf of on-demand laborers, making it difficult, if not impossible, for workers to take advantage of safety-net programs.
Congress sought to remedy the gap temporarily. Part of the coronavirus stimulus bill, known as the CARES Act, which was enacted by President Trump on Friday, includes a federally funded pandemic relief program for an array of self-employed people. But it has become increasingly clear to some in the industry that delays in disbursing aid could make it hard for them stay afloat financially.
Anwaar Malik, a driver for Uber and Lyft in Long Island, said he applied for unemployment aid in New York, the epicenter of the U.S. coronavirus outbreak, immediately after he learned the CARES Act had become law. At the time, though, New York did not appear set up yet to process his claim, leaving Malik’s application in limbo.
By Wednesday, Malik said, he had made more than 1,000 calls to follow up with the state’s unemployment office, mostly without success. That same day, the New York State Department of Labor said it put out a step-by-step guide to help gig workers apply for aid in an effort to address the difficulties other on-demand laborers have also faced. But those resources weren’t readily apparent to drivers like Malik, who offered a grim assessment that afternoon about the future.
“Drivers’ lives are at risk if they don’t get this money,” he said.
The hardships facing gig economy workers, and vexing state and federal officials, illustrate the mammoth undertaking involved in bringing the country’s coronavirus recovery effort online. It takes time to dole out billions of dollars in aid and establish new government programs — time leaders lack if they hope to blunt the havoc wreaked by this deadly pandemic. The magnitude of their task came into sharp relief Thursday, after officials reported a record-breaking 6.6 million Americans filed unemployment claims last week.
As businesses continue closing their doors — or issuing mass furloughs or layoffs — workers have flooded state employment agencies with pleas for jobless aid. Their websites are bogged down and their phone lines are flooded, leaving many Americans with long waits for financial help at a moment when they’re struggling to pay the bills. Some states have told residents to apply for benefits only on certain days, depending on the first letter in their last names, to ease the congestion.
The coronavirus law also requires states to administer new benefits to people who are self-employed, a category that includes workers whose primary income comes from working on behalf of Airbnb, Uber and other companies in the gig economy. The new relief fund provides weekly aid to those affected Americans, along with the same extra $600 laid off and furloughed full-time employees are slated to receive for the weeks they are out of a job.
Already, gig workers and labor activists are scrambling to obtain the money — and reporting difficulties in navigating the government’s complicated relief package. In California, the home base for Uber, Lyft and other Silicon Valley giants, state officials don’t appear ready to handle applications, said Veena Dubal, an associate professor at the University of California, Hastings College of the Law, who is an advocate for gig workers and labor rights. She added that some gig workers who have applied for benefits over the past few days have been told they aren’t eligible.
California’s Employment Development Department, which oversees unemployment payments, said Wednesday that it plans to act swiftly but is awaiting key guidance from the U.S. Labor Department, echoing a concern shared by other states, including Maryland and Virginia. The Labor Department did not respond to a request for comment.
Dubal said it’s a sign of the challenge millions of gig workers nationwide are bound to face. “There is a lot of confusion about how the states are going to be rolling out the benefits provided in the CARES Act,” she said.
Accepting applications, determining eligibility for benefits and processing payments for these previously uncovered workers is likely to be resource-intensive for many states, and through no fault of their own. Their budgets are dwindling, and their staffs may be home as a result of the coronavirus, adding to the possibility it could be weeks before some workers see their first check.
By Wednesday, unemployment officials in Colorado and Pennsylvania advised ride-share and delivery drivers to hold off on seeking aid until their systems were in place. Illinois’s website simply said: “Please do not apply at this time.”
On its website, Washington state also said it needed time and acknowledged that necessary upgrades would not be “complete by mid-April.” However, it reiterated workers are eligible for payments from when their employment was first disrupted by the coronavirus outbreak. The state’s Employment Security Department did not respond to a request for comment.
Meanwhile, in Maryland, the state’s computers are “currently not set up to process these new CARES Act programs immediately,” said Fallon Pearre, a spokesperson for the unemployment agency. Pearre said it would take time to “create new IT systems, modify our current technical systems, train staff, and conduct tests.”
Adding to the challenge are gig economy companies themselves.
For years, Uber, Lyft and their industry peers have contended their workers are not employees and sought to stave off regulation that would upset their business models. As a result, these companies have avoided paying taxes into the pot of government funds that ultimately covers workers when they are out of job. Amid the pandemic, their approach has prompted fresh criticism that Silicon Valley essentially received an undeserved government “bailout.”
With new unemployment programs coming online, some activists said the companies have a new obligation to do their part — including by making wage data available to states so that they can process claims more quickly.
“It’s a significant hurdle for drivers, which these companies could solve tomorrow,” said Rey Fuentes, a fellow at the Partnership for Working Families, which advocates in the San Francisco Bay area for greater benefits for gig workers.
In response, Uber spokeswoman Susan Hendrick said in a statement that the company would work with “states as they establish their process for independent workers to apply for unemployment.”
Lyft spokeswoman Julie Wood said the company had also been in talks with states, adding it recently held a call with drivers to inform them about possible benefits.
In the meantime, some labor activists said, many gig workers remain at risk. Many drivers for ride-hailing apps, for example, cash out their earnings more than once a week, said Moira Muntz, a spokeswoman for the Independent Drivers Guild, a Machinists Union-affiliated group that represents more than 80,000 drivers in New York City. “They’re not even paycheck-to-paycheck — they’re day-to-day,” she said.
In Long Island, Malik said he stopped driving for Uber and Lyft last week, fearing he might catch the coronavirus from one of his ride-hailing passengers and pass it along to his family. Without unemployment benefits soon, though, he said, he may have no choice but to return to the road.
“If I don’t get it,” he said, “I’m going to have to go back to work.”