Congress Bailed Out Uber's Workers. Now What?

With the coronavirus pandemic bearing down on the United States and Congress negotiating with the Donald Trump administration over a giant relief bill, Uber begged Trump not to leave out its drivers, who would normally not be eligible for unemployment benefits because they’re not regular employees.

Congress soon created a whole new unemployment system that covered gig workers as part of the Coronavirus Aid, Relief and Economic Security Act in March 2020. The Pandemic Unemployment Assistance program has paid out more than $100 billion in claims to millions of workers who would never have received unemployment without it.

“It was pretty much a lifesaver,” said Chidi Anyaegbu of Belcamp, Maryland, who drove for Uber and Lyft until last March. “If that CARES Act wasn’t passed, I have no idea where I would be.”

Anyaegbu, a 53-year-old father of four, said he’d been a ride-share driver since 2011 and had nothing to show for it when rides dried up that March and the few riders who remained could expose him to the mysterious new virus. He applied for regular unemployment benefits and was denied.

“It was a nightmare,” he said. “My wife was so scared about what might happen, healthwise.”

The Pandemic Unemployment Assistance program provides essentially the same benefits as regular unemployment compensation but with expanded eligibility criteria that include both gig workers and people who shouldn’t work because of the risk of virus exposure. The expansion resulted in a much higher percentage of jobless workers receiving benefits. It also amounted to a huge favor for gig companies.

Businesses like Uber and Lyft have long avoided the traditional expenses of being an employer and foisted them on workers and the public. Along with avoiding unemployment insurance taxes by classifying drivers as independent contractors, these companies skip out on Social Security taxes and workers compensation fees, while avoiding basic labor laws like minimum wage and overtime. The drivers provide their own cars and cover wear and tear.

Congress has twice extended the Pandemic Unemployment Assistance program, but it expires again in September, when the pandemic will probably be waning thanks to mass vaccination, the unemployment rate will be falling and lawmakers will be losing their appetite for emergency legislation. But the expiration could force a national reckoning with gig companies that stranded their workers in a plague.

“They’ve kind of gotten off scot free,” said Andrew Stettner of The Century Foundation, a progressive, nonpartisan think tank. “They have not made any contributions to this program.”

The simplest options for Congress would be to extend Pandemic Unemployment Assistance for another few months or to let it expire, reverting to a pre-pandemic status quo.

Some states and courts have tried to crack down on the gig companies and force them to reclassify workers as employees, which would require companies like Uber to swallow new costs and upend their business models. After California legislators did just that by passing the law known as AB 5 in 2019, the app-based driver companies managed to carve themselves out of the law a year later when voters approved Proposition 22.

Democrats in Congress are considering a law that would adopt similar criteria to California’s AB 5, but only as it relates to collective bargaining for gig workers. Any kind of broad attempt by Congress to force digital platforms to reclassify workers would be a huge political lift, given the influence the gig companies have shown in legislative fights around the country.

But lawmakers could more easily tailor a solution for just the unemployment issue. Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, in the coming months will unveil a major reform to the state-federal unemployment system, with new provisions to cover gig workers.

“With more and more self-employed and gig workers, a critical piece of reform is ensuring that all jobless workers can get a benefit regardless of their work history,” Wyden said in a statement to HuffPost. “Standing up a system for folks who work as Uber drivers and the like every time there’s an economic crisis is not the answer here.”

Wyden hasn’t released details of his plan, but an aide said it won’t reclassify independent contractors as employees. It’s not clear if it will come with a new tax. But the biggest question is whether unemployment insurance reform becomes a priority for Democrats and the Biden administration. The ruling party has its eyes on infrastructure, voting rights and gun control, and has limited opportunities to pass legislation without Republican support in the Senate.

Stettner said lawmakers ought to explore funding jobless benefits for non-employees through a tax on users or a head tax on companies with a lot of “1099 employees,” known as they are by the IRS form businesses use to report payments to independent contractors.

Veena Dubal, a law professor at the University of California’s Hastings College of Law, said companies like Uber should be paying unemployment insurance taxes and that a special system should not be set up expressly for the app-based companies. Instead, their workers should be properly classified as employees for all basic protections, she argued.

“I am very skeptical of anything that addresses this sector of work in a different way,” Dubal said. “There is nothing different about this work except that these companies deploy their workforce through technology. New laws should not be written to accommodate their business models.”

In his letter to Trump requesting benefits for gig workers last year, Uber CEO Dara Khosrowshahi said lawmakers should work on a new system of social insurance ― and should not reclassify Uber drivers as regular employees.

“Instead of true flexibility ― where workers need not report at a certain time or place, can start or stop working at the tap of a button, and can work on multiple platforms simultaneously ― driving or delivering would come to resemble the kind of shift-based work that many people cannot fit into their lives,” Khosrowshahi wrote.

Labor advocates said Khosrowshahi’s push for new benefits for his workers without reclassifying them as employees amounted to “seizing an unprecedented public health crisis to push forward a radical annihilation of our labor laws.”

Uber declined to comment on the policy debate. A spokesperson noted in an email that the company “launched online guides in all 50 states to assist drivers and delivery people applying” for the benefits Congress created.

So far, it’s unclear if Democrats are interested in making companies like Uber treat their workers as employees, or if they will opt instead for a “third way,” like Khosrowshahi suggested.

Sen. Mark Warner (D-Va.) has written bills that would give states grants to test out different ways of administering a “portable benefit fund” that would follow workers from job to job. He has partnered with Sen. Steve Daines (R-Mont.) and several other Republicans on portable benefits bills in recent years, suggesting the idea could garner bipartisan support.

“I thought that the expansion of unemployment to cover gig workers was really significant and I’d like to make it permanent,” Warner told HuffPost. “But we’ve got to have the companies pay in.”

The Warner bills would leave it to states to figure out how they might impose a tax to pay for the portable benefits. States currently set their own unemployment taxes, within federal guidelines, for regular benefits.

Sen. Chuck Grassley (R-Iowa), a senior Republican on the Senate Finance Committee, which oversees unemployment, Social Security and tax policy, said he’d be open to reforming labor laws to protect more workers. But he’s hostile to the idea of simply entrenching a relic of the CARES Act.

“Anything that we legislated because of the pandemic should not become permanent legislation,” Grassley told HuffPost. “The pandemic should never be used as an excuse to change policy that existed before the pandemic.”

After Congress passed the CARES Act, Anyeagbu filed a claim and had to wait several weeks before Maryland’s workforce agency could establish the program and pay him. Though Congress drafted the bill in a short time, creaky state workforce agencies struggled to actually implement the new policies. Meanwhile, Anyeagbu asked his credit card companies for forbearance.

“At that point, I’m dead,” he said. “How do I pay my bills? How do I take care of my family?”

When the money started, he got a lump-sum check for the weeks he missed, amounting to roughly $7,000, since gig workers also received the $600 per week federal supplement. He has been receiving benefits for the past year and doesn’t want to return to app-based driving, which put tons of mileage on his minivan and forced him to cover the cost of repairs.

Customers sometimes treated him disrespectfully, he said, and he had a dispute with an Uber passenger in January 2020. He said the passenger complained to Uber after his minivan’s automatic sliding door closed on him when he tried to exit the vehicle before it stopped moving. After asking Anyeagbu about what happened in a phone call, the company fired him via email, citing a review of “the information received” plus his “account history.” Anyeagbu said the company took the customer’s word over his own and treated him as “expendable.” He continued driving for Lyft until the pandemic made the work untenable.

“Ultimately, I was like, ’Why am I going out there to beat up my car? The mileage of the car is out of this world,” he said. “The transmission has blew up on me once and it cost me a fortune to fix it.”

He said he’s finishing classes to get a commercial drivers’ license so he can drive a truck, and hopefully trade in the convenience of picking up fares whenever he felt like it for a more reliable source of income.

“I can at least control my destiny,” he said.