Unemployment benefits assist workers when they have been laid off or fired. The benefits do not replace all income, but they help individuals pay bills and expenses while they look for another job. However, not all workers are entitled to unemployment benefits. Our Washington employment law attorney discusses how rideshare drivers might receive unemployment benefits in Washington.
Independent Contractors vs. Employees
Employees are generally entitled to unemployment benefits when they are fired or laid off. There are some exceptions, such as when an employee is laid off for “cause” or “misconduct”. This might include theft from the company, repeated violations of company policies, or other intentional misconduct.
The unemployment system does not typically make employers cover independent contractors. An independent contractor is self-employed. The person may work for multiple clients simultaneously. Gig workers, such as rideshare drivers, are considered independent contractors. They are not employees of the rideshare company. Therefore, rideshare drivers are not entitled to unemployment benefits.
However, Uber and Lyft drivers might be entitled to unemployment benefits under the Pandemic Unemployment Assistance (PUA) program.
What is the Pandemic Unemployment Assistance (PUA) Program?
The PUA is a federal program that provides unemployment benefits to individuals who would not usually be entitled to unemployment compensation. Self-employed individuals, independent contractors, freelancers, gig workers, and part-time workers who lost work because of COVID-19 may receive unemployment benefits.
The Washington State Employment Security Department has instructions on its website for how to apply for PUA unemployment benefits. The current PUA benefits have been extended through March 13, 2021.
Why Are Rideshare Drivers Considered Independent Contractors?
Rideshare companies limit their liability for specific actions and lower their operating costs by not hiring drivers as employees. The drivers are self-employed. Therefore, drivers are responsible for their taxes, insurance, and other expenses related to providing rideshare services.
The Internal Revenue Service states that a person is an independent contractor if the person paying the individual only has the right to direct the project’s outcome but not how the work is completed. Things to consider when deciding whether a person is an independent contractor include:
- Who has control of when and where the work is completed?
- Who provides the tools for the job?
- Does the business train the person to do the work?
- Who controls the finances of the business?
- Does the person work for multiple parties simultaneously?
- Who sets the work hours?
Rideshare workers decide when they work, provide their own vehicles, are responsible for related expenses, and may work for multiple companies simultaneously. Rideshare companies pay a set fee to the drivers based on a fee schedule. Taxes are not withheld from the payments.
Rideshare drivers have been categorized as independent contractors. Therefore, they are responsible for self-employment taxes and are not eligible for unemployment benefits under normal circumstances.
Contact a Washington Employment Law Attorney for Help
If you have questions about your right to unemployment benefits, contact our office today.