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Bill Extends Workers’ Compensation to New York Rideshare Drivers

Rideshare drivers could soon have expanded coverage for work-related injuries, following the passage of New York’s fiscal 2017-2018 budget, which calls for amendments to the Black Car Fund. Further, rideshare services will now be permitted to operate throughout New York, rather than solely in the city.

Uber and Lyft drivers are a significant segment born of the so-called “gig economy,” where workers hired for a single task or project, typically arranged through the digital marketplace, to work on demand. This has revolutionized numerous industries, including transportation. But it has also left us with many sticky legal questions to navigate, including the issue of workers’ compensation.rideshare workers may now be eligible for workers' compensation coverage

Rideshare companies like Lyft, Uber and Sidecar (transportation network companies) have long argued that they are not an automobile service. Rather, they are technology platforms, and as such, drivers are independent contractors, not employees. Because only employees are entitled to workers’ compensation, the reasoning goes, rideshare drivers in New York aren’t entitled to workers’ compensation. Compelling arguments can be made for an against the employee classification.

For example, with transportation network companies, drivers:

  • Use their own vehicles.
  • May work for multiple companies.
  • Do not work rigid schedules.

On the other hand, the rideshare companies:

  • Control hiring.
  • Control pricing.
  • Screens drivers.
  • Sets vehicle standards.

The main question typically raised is how much control a transportation network company has over the driver.

In several states, including Virginia and Alaska, rideshare drivers are specifically excluded from workers’ compensation coverage.

In California, however, the California Labor Commissioner’s Office determined in 2015 Uber drivers are employees, not independent contractors, but Uber has been fighting off employment lawsuits in that state left and right. In two multi-million-dollar settlements reached last year, Uber agreed to pay $100 million to 385,000 drivers in Massachusetts and California, but on grounds it would continue to classify workers as independent contractors. The state of California continues to lean toward classifying drivers as employees.

In New York, meanwhile, rideshare drivers have access to a Black Car Fund, which offers workers’ compensation coverage to companies who are participating members. Uber is required to participate, and fares are 2.5 percent higher to cover the fee.

The new bill would require all rideshare companies to participate in the Black Car Fund, thereby ensuring all rideshare drivers will have workers’ compensation in New York City.

For purposes of workers’ compensation, the fund acts as the driver’s “employer,” per New York statutes. According to the site, the non-profit organization offers coverage of medical expenses and lost wages to ensure the city’s for-hire drivers can be covered in the event of a job-related injury. There are approximately 300 member bases throughout the state, covering 70,000 drivers.

The governors’ office reports the new budget also allows transportation network companies to operate across New York and sets uniform licensing standards, granting the Department of Motor Vehicles with broad oversight to ensure adherence to traffic safety laws, anti-discrimination protections, background checks and zero tolerance policies on alcohol and drugs.

Finally, a state board will be founded to review the impact of the newly-authorized expanded industry throughout the state.