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COVID 2020: Unemployment Guide for Rideshare Drivers

In the last few weeks everything has changed for rideshare drivers and other gig workers just as it has for everyone else.

In the wake of the response to the COVID-19 pandemic, states across the nation have instituted “lockdowns” in an attempt to slow or stop the spread of the virus. The good news is lockdowns work. In fact, in the early states that have tried them they are already showing signs of working. The daily rate of increase in New York for example has dropped from around 36% more new cases per day to 11.14% more new cases per day (in the most recent five-day period 4/3 – 3/30). New York started its lockdown on March 16th.

So, that’s the good news. The bad news is that we will need to stay in lockdown for several more weeks. And each of these weeks is a week that Uber and Lyft drivers (as well as many others, of course) are earning no money.

In a survey we conducted just last week, we found that a majority of drivers told us their earnings are down by 80% and more. And that’s for the few who were still driving at that time. 72% of drivers told us they were driving less, which we now have to assume is closer to not at all.

Alternatives to Rideshare

The amazing thing, as we have talked to drivers around the country in the last few weeks, is to see how rare it is for drivers to automatically think of receiving any type of government assistance. Most drivers have told us they are desperately trying to figure out other ways to make ends meet. Turning to the government has been about the last thing on their mind.

But every which way they turn, they are met with new roadblocks or complete dead ends. The most natural alternative for most drivers would be to pivot from rideshare to food deliveries. But even that is fraught with complications.

One reason drivers haven’t considered government assistance is because they have always been told that as independent contractors they are not entitled to any type of government assistance, and especially not to unemployment insurance. We’ll have more to say on that in a minute.

Why Food Deliveries Might Not Work Out?

Thirty-seven percent of drivers in our recent survey said flat out that they will not do food deliveries. However, 57% said they were either already doing deliveries, just signed up recently to do them or are thinking about doing them. And herein lies the problem. If 57% of rideshare drivers switch to food deliveries, that will add more than a million food delivery drivers to an already crowded marketplace.

If food delivery business skyrockets then it might work out. But early indications are that rather than increasing, the food delivery business is actually shrinking. That’s counter-intuitive because you would think in a time when people are told to stay home that they might order food for delivery more often. But apparently everyone is so shell-shocked right now they’re not sure what they should be doing. A lot of people are thinking they need to hang on to whatever money they had before the lockdowns hit. And millions of people have been suddenly thrown out of work and may not even have money to spend. So they’re looking for cheaper food alternatives than delivery. That’s why you’re seeing so many news stories recently about Americans baking bread at home! And all the ingredients for baking bread are flying off the store shelves!

So, with food delivery, it looks like we have shrinking demand for the service but a growing supply of service providers. That means each driver, including those who were doing delivery before this, are going to see their delivery incomes plummet – unless the companies simply stop taking on new drivers – which they should do in order to protect what’s left of the incomes of the drivers who have been with them for a long time.

Getting a New Job

Talk of getting a new job sounds almost impossible at this moment in time. Yet there are at least a couple of companies that are hiring. Amazon and Walmart. Combined both companies will put nearly 300,000 jobs on the books. But that’s a mere drop in the bucket compared to the 10 million people who filed jobless claims in just the last two weeks.

On the other hand though, these Amazon and Walmart jobs would be a good fit for sidelined drivers. And drivers would probably find they’ll end up making more than they were before. Amazon is promising to pay $17 per hour to new recruits. Walmart is also in that range, and is offering some benefits as well.

Navigating Unemployment

It is estimated that there are approximately 2 – 3 million Uber and Lyft drivers in the United States – so even if all the Amazon and Walmart jobs went to drivers, there would still be a lot left over in need.

Fortunately, there is now some help on the horizon. After always being told that as independent contractors drivers would never be able to collect unemployment insurance or any other form of government help if they ended up out of work, the new stimulus package recently passed by Congress will now cover independent contractors – which includes all Uber and Lyft drivers.

The stimulus package that was just passed brings in numerous categories of workers that would not qualify for unemployment insurance before, but who now will. The type of workers who are now qualified to receive state unemployment insurance are:

  • Self-employed
  • Independent contractors
  • Gig workers
  • Freelancers
  • People with a limited work history

In addition to your state’s regular unemployment benefits the federal government will send an additional $600 per week for up to four months, through July 31, 2020.

The federal government’s stimulus package will also fund an additional 13 weeks (3 months) of unemployment benefits for workers. The package also waives the one-week waiting period most states impose on the payment of unemployment benefits.

To receive this assistance you must apply with your state’s unemployment office. This can be done online and we have links to the unemployment office websites of all 50 states at the end of this article.

Potential Obstacles in Receiving Unemployment

Politicians are great at telling us what we want to hear, when we need to hear it! They’ve promised to take care of drivers and gig workers. They’ve passed a $2.2 TRILLION bill to fund it all. But it’s not going to be quite as easy as it sounds so bear with them and be forewarned. Knowing this in advance should help to ease your frustrations as you go through the process.

As of this writing, many states have not yet updated their websites to conform to the new law and this is causing people to be unable to complete their applications.

For instance, the State of New Jersey’s website, like many states, still reflects the now-outdated requirement that you must have been employed by an employer in order to receive unemployment insurance. So like every state’s unemployment site, it asks applicants to list the name and Federal Tax ID Number of their employer.

While we know that independent contractors who aren’t legally employed by any company will now be covered by state unemployment insurance, thanks to the federal stimulus package, that information has not made its way to all state websites. So many state websites are still requiring workers to identify their “employer”. If you don’t list an employer your application will be rejected automatically and your claim will be closed.

A lot of drivers are putting Uber or Lyft on their applications as employers. And that’s probably OK to do at this point. Unless your state’s website has a way to indicate that you were an independent contractor then it is not yet updated to work under the new conditions we find ourselves in. We recommend doing the best you can, use Uber or Lyft as your “employer” if you have to but also indicate that you were an independent contractor working with them if they give you an opportunity to write out some comments.

If you decide to call your state’s unemployment office you’ll probably end up just more frustrated. In the last two weeks there have been more than 10 million new unemployment claims filed. That’s ten times more than most state unemployment offices receive in a whole year! So they are swamped – to say the least. Their web developers are probably swamped to which will add to the time it will take them to get their websites inline with the new law.

You Have to Pay Taxes on Unemployment Payments

Just as a reminder/warning – recipients of unemployment insurance payments do have to pay taxes on them just as they would any other regular income. So keep track of what you receive. The downside for rideshare drivers and other gig workers is that you’ll receive this income but you won’t have your regular corresponding expenses to write off against it. So where you may have paid taxes on just a fraction of your income before, you’ll have to pay taxes on 100% of your unemployment income. So try to set some aside, if at all possible.

Links to the Unemployment Offices of all 50 States

Here are the links to the nation’s 50 state unemployment offices. This is where you’ll begin the process.

Alabama Department of Labor Visit Website
Alaska Department of Labor and Workforce Development Visit Website
Arizona Department of Economic Security Visit Website
Arkansas Department of Workforce Services Visit Website
California Employment Development Department Visit Website

Colorado Department of Labor & Employment Visit Website
Connecticut Department of Labor Visit Website
Delaware Department of Labor Visit Website
Florida Agency for Workforce Innovation Visit Website
Georgia Department of Labor Visit Website

Hawaii Department of Labor and Industrial Relations Visit Website
Idaho Department of Labor Visit Website
Illinois Employment Security Visit Website
Indiana Department of Workforce Development Visit Website
Iowa Unemployment Insurance Services Division Visit Website

Kansas Department of Labor Visit Website
Kentucky Office of Unemployment Insurance Visit Website
Louisiana Workforce Commission Visit Website
Maine Department of Labor Visit Website
Maryland Department of Labor, Licensing, and Regulation Visit Website

Massachusetts Department of Unemployment Assistance Visit Website
Michigan Unemployment Insurance Agency Visit Website
Minnesota Unemployment Insurance Visit Website
Mississippi Department of Employment Security Visit Website
Missouri Department of Labor and Industrial Relations Visit Website

Montana Unemployment Insurance Division Visit Website
Nebraska Workforce Development Visit Website
Nevada Department of Employment, Training & Rehabilitation Visit Website
New Hampshire Employment Security Visit Website
New Jersey Department of Labor and Workforce Development Visit Website

New Mexico Unemployment Office Visit Website
New York State Department of Labor Visit Website
North Carolina Employment Security Commission Visit Website
North Dakota Job Service Visit Website
Ohio Department of Job and Family Services Visit Website

Oklahoma Employment Security Commission Visit Website
State of Oregon Unemployment Insurance Visit Website
Pennsylvania Office of Unemployment Compensation Visit Website
Rhode Island Department of Labor and Training Visit Website
South Carolina Department of Employment and Workforce Visit Website

South Dakota Department of Labor & Regulation Visit Website
Tennessee Department of Labor Visit Website
Texas Workforce Visit Website
Utah Department of Workforce Services Visit Website
Vermont Department of Labor Visit Website

Virginia Employment Commission Visit Website
Washington Employment Security Department Visit Website
Work Force West Virginia Visit Website
Wisconsin Department of Workforce Development Visit Website
Wyoming Department of Employment Visit Website

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