App-Based Workers Can Receive Unemployment Benefits During COVID-19

On March 26, 2020, New York’s highest court issued an important decision that opens the door for New York “gig” and app-based workers to be classified as employees who enjoy the worker protections that independent contractors lack. The delivery app Postmates is required to contribute to the state unemployment insurance fund for Postmates couriers who are employees according to the Court of Appeals. App-based and gig workers will soon be eligible for the same governmental benefits as other employees who are not working due to the COVID-19 pandemic.

In 2015, Postmates blocked Luis Vega, a delivery worker, from using the application that Postmates uses to assign workers to delivery jobs.  Vega filed for unemployment benefits and the Department of Labor determined that he was an employee of Postmates requiring Postmates to make unemployment insurance contributions on his behalf.  

At first, Postmates successfully challenged the decision, but the Department of Labor persisted and appealed. The Court of Appeals agreed and found Vega to be an employee.  The court based its decision on Postmates’ control over Vega’s work, including by deciding whether to give him access to the app, tracking his location while on deliveries, determining delivery pricing, handling customer complaints and setting his salary.  

The recently enacted federal CARES Act creates a Pandemic Unemployment Assistance Fund to give benefits to workers who are not otherwise eligible for unemployment benefits because they are independent contractors, have limited work history, or self-employed. Also, the Act provides benefits for workers who run out of federal or state unemployment benefits. Qualifying workers can receive payment for up to 39 weeks, regardless of the maximum number of weeks allowed by their state unemployment law, between January 27, 2020 to December 31, 2020. The CARES Act eliminates any waiting period before benefits start being paid out. Finally, the benefit a worker will receive is calculated using their state’s unemployment compensation law, plus an additional amount of $600 per week until July 31, 2020.  In New York, the $600 per week additional amount will take effect on April 5, 2020. 

For more information on these benefits, including who is entitled to them, see LR’s What You Need to Know Now Congress Passes CARES Act.