Had Congress not acted, some workers for on-demand companies would have been unable to obtain such aid: That’s because these laborers — in the eyes of the law and the Silicon Valley tech giants that they serve — are not treated the same as traditional full-time employees and afforded similar help when they’re facing financial duress.
“The unemployment insurance system, created during the Great Depression, is strikingly out-of-date and completely unequipped to deal with our current crisis,” Sen. Ron Wyden (D-Ore.), who helped craft the legislation, said before its passage.
For some workers and their top advocates, though, the early celebration might be short-lived: Some said they fear it could take too long, or prove too onerous, to access new jobless benefits. Others questioned the very nature of program, which would see the federal government, not the likes of Airbnb, Uber and Lyft, paying for the weekly sums to the workers upon whom many tech platforms rely most.
“Companies are essentially getting a bailout because they won’t be paying unemployment insurance as a result,” said Veena Dubal, an associate professor at the University of California’s Hastings College of the Law who is an advocate for gig workers’ labor rights. “It could get workers money, but maybe not in the rapid way they need money.”
The rare, bipartisan effort on Capitol Hill underscores the unprecedented nature of the coronavirus pandemic, which has killed more than 1,000 in the United States and sickened scores more, while shuttering businesses, closing schools and overwhelming the country’s health-care system. It has upended the economy and jolted Washington, where lawmakers overcame partisan divisions to wrestle together a stimulus package that’s historic in its size and scope — in a matter of days.
A record 3.3 million Americans filed for unemployment benefits last week, the latest sign that the country’s economic slowdown threatens to become a prolonged recession. But missing from among those applicants are people who make their living entirely through services like Airbnb, Lyft, Uber, Grubhub and Postmates, which treat drivers, renters and delivery workers as independent contractors, not employees. These and other freelancers and self-employed workers make up 10 percent of the U.S. workforce, previous federal studies have found.
Gig-economy companies long have touted this setup as the future of work, a legal flexibility that in practice permits workers to make money on their own schedule. But the arrangement also allows some tech companies to avoid paying for a portion of their on-demand workers’ health-care costs or remitting taxes to the government for social safety-net programs, including unemployment insurance, sparking widespread criticism — and a raft of legal challenges.
The latest example surfaced Thursday, when New York Attorney General Letitia James announced that a state appeals court had ruled in favor of her case against Postmates, a food delivery service. Judges determined that the on-demand couriers for the app are, in fact, employees — and that the company should contribute to state unemployment funds for them.
“As the nation battles the spread of the coronavirus and more and more employees are laid off, Postmates drivers should know they have the same safety net millions of others in New York have today,” James said in a statement. Postmates responded in a statement that it disagreed with the decision, stressing the need for a “modern worker classification framework.”
In crafting their coronavirus aid package, lawmakers in Congress opted against wading into the thorny war over who qualifies as an employee. Instead, lawmakers set up a fund focused on self-employed workers affected by the outbreak yet ineligible to receive traditional unemployment insurance. The workers can soon apply in their states for aid, and until the end of July, they will see a $600 boost to each of their checks, lawmakers said.
Those who drive for Uber or rent homes on Airbnb as side gigs — to supplement other full-time employment — already can access existing out-of-work support if they lose their primary job. Lawmakers also enhanced those benefits when they adopted the CARES Act this week.
“COVID-19 is the kind of crisis that demonstrates the extent to which we’ve got a whole swath of the economy working without basic social insurance protections,” Sen. Mark R. Warner (D-Va.) said in a statement. “We are making sure that people who would normally fall through the cracks, like gig workers and freelancers, get covered.”
Airbnb praised lawmakers in a statement for adopting a package that helps “a new sector of the workforce who depend” on the company. Lyft said the bill would “help the vast majority of people who drive” with the ride-hailing app. “Those who’ve lost the opportunity to earn need and deserve this support,” Uber chief executive Dara Khosrowshahi said in a statement. He recently wrote an open letter to Congress and the White House, stressing Uber did not seek a “bailout,” but rather aid for drivers.
To Dubal and fellow labor activists, however, that’s precisely what it is — a program subsidized by the federal government in the absence of action tech giants should have taken on their own.
"It's potentially a boon for gig companies," she said.
With only days at their disposal, Senate aides who helped broker the initial coronavirus aid deal said they lacked the time to rethink the whole system, including rewriting the tax code. Others said it could cause further economic damage if they had assessed new burdens on major businesses, including gig-economy companies, some of which have witnessed precipitous declines in the stock market.
And many lawmakers agreed that the new pandemic assistance fund should be a starting point for a broader update to the country’s worker-protection laws. “Over the long-term we need to modernize the unemployment insurance system to cover these workers on a permanent basis," Wyden said in a statement.
While Washington is fronting the costs, it’s the states that set unemployment insurance rules and determine how much out-of-work Americans receive. That means the exact process by which gig-economy workers must now apply — and how long it takes to obtain benefits — could vary.
Some people may have to apply for traditional unemployment benefits, then be denied, to be eligible for the new pot of funds commissioned by Congress, experts feared, potentially meaning that it could be weeks before some Uber drivers and Airbnb hosts actually see their first checks.
“The challenge is, this has never been done,” said Alastair Fitzpayne, executive director of the Future of Work Initiative at the Aspen Institute. He said regulators would be “responsible for new programs they haven’t implemented before at a moment when they’re receiving historic unemployment claims.”
In the meantime, labor activists called for gig-economy companies to pay their fair share.
“Uber, Lyft and taxi drivers across the country have seen their earnings plummet and are desperate for relief,” said Moira Muntz, spokeswoman for the Independent Drivers Guild, a Machinists Union affiliated group that represents more than 80,000 drivers in New York City. “Providing these workers compensation for lost earnings is the right thing to do amid this pandemic. Meanwhile, the app companies need to step up, too, starting with those most affected by the crisis”
The guild also called for easier access to sick pay for those who are affected by coronavirus and automatic compensation for at-risk groups, such as those over age 70, who are required to stay home. Uber and Lyft have committed to providing up to two weeks of sick pay for drivers unable to work because of the coronavirus.
Kimberly James, who drives for multiple apps, including Uber’s food delivery service and Lyft, said health problems have sidelined her for nearly the past two weeks. She hasn’t been able to secure a doctor’s note describing her autoimmune disorder and inability to work — so she hasn’t been able to collect much-needed sick pay from the apps that offer it.
“You cannot get through to a doctor right now,” she said.
James said the prospect of monetary aid at a moment when she’s out of work could be a godsend — but she said this week that previous experience means she isn’t holding her breath.
“I mean, yeah, it’d definitely cover me and help me,” she said. “I’m scared to death it’s going to be like usual and I fall through the cracks somehow with some stupid rule here or there because somehow I always seem to.”