Key Takeaways
- Uber drivers, classified as independent contractors, generally aren’t eligible for unemployment benefits.
- Certain states like New York and Washington provide specific benefits to rideshare drivers.
- The CARES Act temporarily allowed gig workers to claim unemployment due to COVID-19 impacts.
- Applying for unemployment benefits involves proving income and employment history with Uber.
How Does Uber Classify Driver Partners?
Before we jump into unemployment packages, you need to understand your status as a rideshare driver. This will help you figure out what you’re entitled to.
When the ride-sharing business launched, it classified all its drivers as independent contractors. Although, this wouldn’t last for long.
That changed after the New York tax scandal. At the time, it became publicly known that Uber mistakenly charged commissions based on pretax earnings rather than after-tax income.
As you can imagine, this came at a cost of tens of millions of dollars to New York drivers. Luckily, the scandal raised many questions about how Uber was treating its workers, which led to a lawsuit.
In 2017, a New York judge ruled that Uber would have to treat its workers as full-time employees, not independent contractors.
That came as a major blow to the ride-sharing company, so the business spent the next few years trying to overturn the ruling.
Unfortunately, in 2020, California passed Proposition 22. This allowed companies like Uber to classify its drivers as independent contractors in the gig economy.
While many people have tried to challenge Proposition 22, the California Appeals Court ruled that it was largely constitutional in March 2023.
Today, drivers are independent contractors. This means these gig workers assume the responsibilities of employment.
For instance, they have to pay their own taxes and don’t qualify for regular workplace protections. On top of that, as independent contractors, drivers aren’t eligible for unemployment benefits.
However, there are a few exceptions to this rule.
Understanding Unemployment Benefits
As we mentioned, under normal circumstances, rideshare can’t apply for unemployment benefits. Yet, this changed after the COVID-19 pandemic hit.
The quarantine caused a lot of disruption in the economy. People were losing their jobs left and right, which left them struggling to make ends meet.
No one felt the effects of this disruption more than rideshare drivers. The ride-sharing workers no longer had any clients, since everyone was stuck at home.
This prompted the government to step in and provide various types of support. So, it put pandemic unemployment assistance measures in place.
As long as these policies remain active, gig workers like Uber’s contractors can claim unemployment benefits.
That means the federal government will provide drivers with temporary income. The money will partially replace the worker’s lost earnings to help them pay for normal expenses while they look for a new job.
The same rules apply to DoorDash unemployment.
Although, to qualify for unemployment, you need to meet a few requirements. These include working for a specific duration and earning certain wages.
Eligibility of Uber Drivers for Unemployment Benefits
Without governmental assistance, most gig workers aren’t eligible for unemployment. However, this will depend on where you live.
That’s because there are a few states that classify Uber drivers as employees. A great example of that is Washington.
In 2023, it became the first state to establish unemployment benefits and family and medical leaves for Uber and Lyft employees.
Yet, their status as independent contractors hasn’t changed. Washington only provides Uber drivers with specific benefits to improve their quality of life.
Moving on, there are a few other states that offer unemployment benefits to Uber drivers. For instance, in New York, the court found that Uber exercised sufficient control over its workers for them to qualify as full-time employees.
Because of that, the state entitled gig workers to some normal workplace protections. However, as the laws in most states are constantly in flux, these guidelines can change in a flash.
This left many Uber drivers feeling unsure and insecure about their futures. That’s why the government introduced bills like the CARES Act.
Impact of the Pandemic and CARES Act
The COVID-19 pandemic has brought unprecedented challenges to the job market. Sadly, this had a significant impact on gig workers like Uber drivers.
So, as the quarantine led to a surge in job losses, the government put some measures in place to ensure drivers could ride out the pandemic.
One of the most prominent legislations is the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
This is a $2.2 trillion economic stimulus bill dedicated to reducing the negative effects of the quarantine.
For instance, the CARES Act launched the Pandemic Unemployment Assistance (PUA) program to aid self-employed individuals. It’s a service that expanded the unemployment insurance eligibility to independent contractors and part-time workers.
With this act in place, Uber drivers could seek for normal benefits like unemployment.
However, it’s important to note that CARES was only a temporary bill. The government designed the provisions to address the unique circumstances of the pandemic.
So, as the economy bounces back, the criteria for unemployment are constantly changing. For that reason, it’s best to check with your local state laws when training to obtain benefits.
How to Get Unemployment Benefits as an Uber Driver
Right off the bat, you have to check your state’s unemployment agency website since they may vary depending on location.
Make sure you meet the criteria before you seek out the benefits. Once that’s out of the way, it’s time to gather any necessary documents.
You’ll need proof of income and a record to show your employment history with Uber. Besides that, you may have to supply documents to verify your identity, like your social security number and bank statements.
After that, you can file your claim online through your state’s unemployment portal. At this point, all that’s left is for you to wait.
So, be prepared for potential delays.
If you’ve not done if before, the process can be a little overwhelming. For that reason, you may want to hire professional help.
You can seek assistance from legal experts and your state’s unemployment agency.
Frequently Asked Questions
Does Money Earned from Uber Count as Income?
The simple answer to this question is yes, any money you earn from Uber counts as income. As long as you make more than $400 driving for Uber, you have to report this profit to the IRS and local state agencies.
Can I Do Uber and Still Collect Unemployment?
To qualify for unemployment, you can’t have any active revenue streams. So, if you start driving for Uber, you’ll need to report this income, which can cause your benefits to lapse. However, not disclosing your income may lead to penalization and fines.
Does Uber Report Income to Unemployment?
Since Uber drivers are independent contractors, the ride-sharing company itself won’t report your earnings or labor status to governmental agencies. Instead, you’ll need to self-report your income for tax and unemployment purposes.
Wrapping Up
If you’re an Uber driver, you may qualify for unemployment. Although, this will depend on where you live.
That’s because there are some states that consider these gig workers as full-time employees. In that case, you’re eligible for Uber unemployment.
Yet, if you live in a state where Uber drivers are independent contractors, you have to ask the government for help. You can apply for provisions like the CARES Act’s PUA program insetad.
