Uber, Lyft drivers in limbo as judge hears arguments in case brought by California


Uber and Lyft on Thursday defended against a lawsuit, brought by California and San Francisco, Los Angeles and San Diego, accusing the companies of not complying with a law to classify their drivers as employees.


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A judge said Thursday he would probably decide “within a matter of days, not weeks,” whether he will order Uber Technologies Inc. and Lyft Inc. to immediately comply with a California law that classifies their drivers as employees, in a closely watched case that could deal a blow to the business models of the ride-hailing giants.

The pending decision by Judge Ethan Schulman of the San Francisco County Superior Court on the lawsuit by California’s attorney general and the city attorneys of San Francisco, Los Angeles and San Diego — who are seeking an immediate injunction ordering the two companies to reclassify their drivers — could have wide-reaching repercussions on the gig economy.

Schulman mentioned a few times that he was struggling to balance the harms that an immediate injunction could bring, especially after Lyft
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attorney Rohit Singla characterized it as a “dramatic” and unprecedented action that would be burdensome to the companies and could lead to hundreds of thousands of drivers losing “income opportunities.”

“I feel a little bit like I’m being asked to jump into a body of water without really knowing how deep it is, how cold the water is and what’s going to happen when I get in,” the judge said during the nearly three-hour-long hearing in San Francisco, which was conducted virtually.

AB 5, which became law on Jan. 1, codified a 2018 California Supreme Court ruling. The ruling, known as Dynamex, adopted an “ABC test” that says workers can be considered contractors only if they control their work; if their duties fall outside the scope of a company’s normal business; and if they are “engaged in an independently established trade, occupation or business.”

Uber attorney Theane Evangelis argued that some changes the company has implemented since AB 5 went into effect, including allowing drivers to set their own rates in a limited fashion, ensure that the company can meet the ABC test.

When AB 5 passed, it was widely seen as a threat to the gig economy’s business model, which relies on independent contractors who are not provided guaranteed minimum wages or benefits.

The drivers’ lack of benefits became even more pronounced during the coronavirus crisis, as demand for rides plunged amid widespread lockdowns. Drivers did not have paid time off or employer-backed health care amid a pandemic. Many sought unemployment benefits.

“What we think is dramatic is that these workers are being systematically denied a wide range of employee protections and being harmed by these practices,” said Matthew Goldberg, deputy city attorney for the San Francisco City Attorney’s office.

In their lawsuit, the state attorney general and city attorneys list as violations the companies’ failure to pay unemployment insurance taxes and other taxes toward the state’s social insurance programs.

Goldberg pointed out Thursday that the two companies have more than $11 billion of cash reserves combined.

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and Lyft argued that they should not have to comply with AB 5 until after California residents vote on Proposition 22, an initiative the companies backed that will be on the state ballot in November. It seeks to define ride-hailing and delivery drivers as independent contractors and establish specific labor and wage regulations for app-based companies.

The companies often say they provide drivers with flexibility, and attorneys for both Uber and Lyft made that same argument Thursday.

But San Francisco City Attorney Dennis Herrera said in a statement after the hearing that “There is no rule that prevents these drivers from continuing to have all of the flexibility they currently enjoy. Being properly classified as an employee doesn’t change that.”  

Uber declined comment Thursday. Lyft did not immediately respond to a request for comment.

Uber and Lyft are also facing other lawsuits over worker classification, including ones filed this week by California’s labor commissioner accusing the two ride-hailing giants of wage theft “by willfully misclassifying drivers as independent contractors instead of employees.” The lawsuits filed Wednesday in Alameda County Superior Court against each company by Lilia Garcia-Brower seek back wages, damages and penalties, including for failure to provide minimum wages, rest breaks, overtime pay and more.

According to Nicole Moore, a Los Angeles-based organizer with Rideshare Drivers United, more than 5,000 drivers have filed wage claims with the state. “You can’t really overlook claims of $1.35 billion,” she said in an interview. In a letter to drivers dated Aug. 5, the California Division of Labor Standards Enforcement said those claims would be dismissed by the state because it is now suing the companies and seeking those wages on drivers’ behalf.

See: Uber’s delivery business tops core ride-hailing as pandemic rocks earnings

Thursday’s hearing came on the same day Uber reported that it lost $2 billion in the second quarter as rides plunged 67% compared with the year-ago quarter. Lyft is scheduled to report its results next week.



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‘We, the qualifying taxpayers, should not have to suffer’: When will I receive my FIRST stimulus check?


Dear Moneyist,

I feel I was unfairly denied the stimulus payment. In 2019, I made a total of $51,331. My filing status was “single, no children.” I was denied the stimulus payment on 4/10/20 because the IRS based my income on my 2018 taxes.

I was permanently laid off from my job as a direct result of the coronavirus pandemic. I was the supervisor of the department that processed and reconciled parking citations written by my city.

Since mid-March, the number of parking citations drastically fell due to the coronavirus pandemic, and this caused a major reduction of revenue in my department which resulted in me losing my job.

I do not understand why they cannot send out the stimulus checks for the people that do qualify, according to their 2019 taxes. Why didn’t they put the checks on hold until the 2019 taxes were received if the 2018 taxes did not qualify, instead of flat out denying people who truly do qualify?

The Moneyist:I told my unemployed tenant about jobs. He said they don’t pay enough, and sits at home smoking weed. Now he wants a discount. What do I do?

This timing game is preventing people who qualify from receiving the assistance that is desperately needed. I understand there was no time to iron everything out before the checks were dispersed. But why not fix this loophole, and send the checks that truly qualify from their recent 2019 taxes?

I was told by the IRS they cannot go back on their original decision. It is obvious that this decision was rushed, and not thought through. We, the qualifying taxpayers, should not have to suffer due to this loophole.

I am not a high income earner. My 2018 income was inflated due to a 401(k) disbursement that I had to take to save my house due to a scheduled layoff in 2018.

I really wish someone could help. The $1,200 is desperately needed.

A Very Disappointed Unemployed Taxpayer

Dear Disappointed,

I’m very sorry you were laid off.

The pandemic has affected so many parts of the economy. Parking-ticket revenue was one area that did not occur to me. I understand you are frustrated, and it does feel unfair. However, I do hope that the weekly $600 in extra unemployment benefits went some way in making these last few months easier to manage. It’s more for some people than others, I know, but the $2.2 trillion CARES Act has gone some way in easing that burden for millions of Americans in a situation similar to your own.

The Moneyist: I filed a joint tax return with my estranged wife because she is a gambler and her finances are a mess. But I got NO stimulus check — what can I do?

Had the Internal Revenue Service delayed the stimulus-check program for you, and others like you, it would have also delayed it for millions of other Americans. It did not work with the precision of a Swiss watch, but the staff at the IRS were working hard to send as many checks to people as soon as they humanly could — with the challenges of computer networks that were not set up for such a public-health and financial emergency.

The Moneyist: I didn’t get my stimulus check because I owe back child support. It’s not fair. My stepchildren rely on me — what can I do?

The good news: Your $1,200 stimulus check will arrive with your 2020 tax refund. Lawmakers are still wrestling over the details of the next stimulus package. “It’s clear no Phase Four deal will be made until the week of August 3rd, which remains our base case,” said analysts at Beacon Policy Advisors in a note Thursday. “But given the current lack of unity among Republicans, which could slow down the pace of the negotiations with Democrats, a final deal could even slip a few days further into the week of Aug. 10.”

The bad news: It will be based on 2019 tax returns, too.



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Health care will cost this much in retirement — but probably even more


A 65-year-old couple retiring this year should expect to spend about $295,000 on health care costs alone in retirement — but quite frankly, that estimate is conservative.

The figure, calculated by Fidelity Investments as part of its annual Health Care Cost Estimate, includes Medicare Part A, Part B and Part D premiums and deductibles, but it does not include over-the-counter medications, vitamin supplements and glasses. Long-term care insurance is also not included, which on its own could be an additional thousands of dollars a month. (Fidelity also didn’t take COVID-19 or related costs into account when modeling its health care cost estimates.)

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

Long-term care insurance covers the expenses the elderly may face when they’re no longer able to conduct certain regular activities (such as bathing or feeding) or when they need to live in a nursing home or assisted living facility. The expense was not included in Fidelity’s calculation because of the sheer fluctuation in prices and variables necessary to determine the proper coverage plan, said Hope Manion, chief health and welfare actuary and senior vice president of Fidelity Workplace Consulting. “To try to predict what long-term care expenses you may need is tricky and depends on the individual,” she said.

See: Living in retirement during COVID-19? How to keep your cool

Some people may want to enroll in long-term care insurance, especially if they have a family history of dementia or other debilitating illnesses. The cost for coverage rises the closer someone is to retirement age, which is why Manion said people in their 40s and early 50s may want to look into plans now. The average cost of living in a semiprivate room in a nursing home in the U.S. was $6,844 a month in 2016, or $7,698 a month for a private room, according to the U.S. Department of Health and Human Services. A one-bedroom unit in an assisted living facility was $3,628 a month. The cost for a health aide was $20.50 an hour.

Even without long-term care expenses, however, health-care costs are constantly increasing — and future retirees will need to take that rise into account when saving and planning for their futures. The 2020 estimate of $295,000 is a 3.5% increase from last year alone, and an 18% increase from 2010. A single woman retiring at 65 in 2020 can expect to pay around $155,000 for health care during her retirement while a man at the same age may pay $140,000. This is separate from the money they’ll need to pay for housing, groceries, any travel or leisure or potential inheritances they leave their loved ones (if they can or decide to do so).

“If you’re thinking about your portfolio and saving strategy, you want to make sure you can take $300,000 of that — depending on who you are and if you’re single, half that — and then look at whether or not you can live on what you saved aside from that,” Manion said.

Also see: This is how much you need for retirement — and how COVID-19 will change that

Along with savings strategies, Americans fortunate to have health benefits through an employer should review their offerings during open enrollment later this year. A fourth of companies said they changed employee health benefits during the COVID-19 pandemic, but 79% of employees said they don’t intend to spend any extra time sorting through their options.

“It’s a great time for employees to be digging in,” Manion said. During open enrollment, employees can see if they have a Health Savings Account available to them, which offers triple-tax benefits but can be unaffordable to some participants because of its high deductibles. They should also review deductibles, out-of-pocket maximums and what might be the impact of a major life event that occurred in 2020, such as a new baby or marriage.

There may also be benefits employees did not know existed or did not have much use for before, such as telemedicine, meditation services and wellness programs. With such a stressful and volatile year, some people and their workplaces are becoming more open to talking about mental health.



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This chart shows what matters more as schools announce COVID-19 reopening plans


Pre-schoolers and instructors in summer session in Monterey Park, Calif.


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One of the most enduring—and maddening—aspects of Betsy DeVos’s legacy as secretary of education will be the way she has politically charged complicated issues in education.

By reducing nuanced issues to a simple directive or judgment, she has attached her reputation—and President Trump’s reputation in turn—to those positions, making the issues as polarizing as the two of them. Examples abound, from charter schools to Title IX.

Now, though, we have an issue that seems more complicated, with higher stakes, than anything the education community has seen in decades. Local and state policymakers must decide whether, when, and how to open schools amid a dangerous and unpredictable pandemic. These decisions are challenging in many ways, from their countless logistical considerations to hard ethical questions about how to weigh public health risks against the costs of school closings. The considerations vary from one city (and school) to the next based on local infection rates, school resources, and community needs.

One would hope—and expect—the federal government would respond with deference to local leaders, generous resources to support school reopeningand distance learning, and clarity on medical research and best practices. Yet, the federal government’s response has fallen far short of this standard. The message from the Trump administration has been to open school doors, no matter what. Reporting on negotiations between the White House and Republican legislators suggests that almost half of funds for K-12 schools in the COVID-19 aid package could be unavailable to schools that do not reopen with in-person learning. CDC guidance on school reopening has become so politicized that it now lacks credibility.

This puts local decision-makers in the precarious position of making reopening decisions with insufficient resources and information, and problematic incentives. Moreover, now that school reopening has become politicized—like mask-wearing and hydroxychloroquine before it—we’re all in the precarious position of having local and state leaders who might, knowingly or not, prioritize politics over safety and reason in their decision-making.

An analysis of school reopening plans

I brought together data from a few sources to get a sense for whether the reopening decisions to date seem more related to public health or politics. I downloaded an EdWeek database of school district reopening plans, which, as of July 27, represented about 13 million students in 256 districts (excluding districts with plans coded as “Undecided,” and Puerto Rico, which does not participate in U.S. presidential elections).

Since school district boundaries are not coterminous with county boundaries in some states, I used data from the U.S. Department of Education to identify the districts’ primary county location. I then merged data from the MIT Election Data + Science Lab with county-level results from the 2016 presidential election and data from USAFacts showing the number of new COVID-19 cases by county from July 1 to July 25. The idea is to see what is more related to these district decisions (albeit not necessarily causally)—local health conditions or politics.

Figure 1, below, shows that reopening decisions are much more correlated with local political attitudes. Each dot in the scatterplot represents a school district. The light blue dots represent districts that, by EdWeek’s coding, had announced “Full in-person reopening available for all students” (the preferred approach of the Trump administration). The dark blue dots represent districts that have announced plans for “Remote learning only.” The x-axis shows the percentage of each county’s population that reports a new COVID-19 case during the month of July (through July 25), while the y-axis shows President Trump’s county-level vote share in the 2016 election.

If public health considerations were driving districts’ decisions, we might expect to see the light blue dots to the left and the dark blue dots to the right. This would mean that districts with relatively high COVID-19 rates per capita are the ones opting for distance learning.

In reality, there is no relationship—visually or statistically—between school districts’ reopening decisions and their county’s new COVID-19 cases per capita.

In contrast, there is a strong relationship—visually and statistically—between districts’ reopening decisions and the county-level support for Trump in the 2016 election. Districts located in counties that supported Trump are much more likely to have announced plans to open in person.

On average, districts that have announced plans to reopen in person are located in counties in which 55% voted for Trump in 2016, compared to 35% in districts that have announced plans for remote learning only. Unsurprisingly, the one remaining group in EdWeek’s data—“Hybrid/Partial”—falls right in the middle, at 44%.

These data aren’t perfect. For example, EdWeek’s database of district reopening plans is, by its own acknowledgement, incomplete, and school districts don’t map perfectly to counties. However, the patterns are so clear, and the regression results so consistent (e.g., controlling for different variables and restricting the timeframe of district announcements), that it seems implausible that politics aren’t a major factor in district decision-making.

Looking ahead

There has been some optimism that local leaders will set national politics aside as they make decisions about school plans for the fall. However, we need to be clear-eyed that national politics—and the strings attached to federal resources—can affect the decisions of local and state leaders. Politicization has become an immediate concern for the COVID-19 relief package, which now threatens to withhold funds from school districts in severely affected areas that need to build remote learning capacity. As Sarah Reber and Nora Gordon have argued, Congress needs to move quickly and generously, without playing games with school reopening politics.

Now is a time for local and state policymakers to focus on the best interests of their communities, apart from how that relates to matters of ideology and national politics. Of course, better leadership from the federal government would take us a long way in that direction.

Jon Valant is a senior fell at The Brookings Institition’s Brown Center on Education Policy. Follow him on Twitter @JonValant. This was originally published on The Brookings Institution’s Chalkboard blog.





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Republicans want to replace extra $600 unemployment with 70% replacement wages — but that could take months


What’s next for Americans who may have received their last unemployment-insurance checks that included the extra $600 a week from the CARES Act?

Well, that depends on how well-equipped their states’ employment offices are.

On Monday, Senate Republicans unveiled a new stimulus package, dubbed the Health, Economic Assistance, Liability Protection and Schools Act, or HEALS Act, that calls for implementing supplemental weekly unemployment benefits equal to 70% of a workers’ prior wages with a $500 cap.

But implementing that would take a minimum of eight to 20 weeks for state labor departments, according to a memo to members of Congress written by the National Association of State Workforce Agencies, a nonprofit and nonpartisan trade group.


The Republicans’ HEALS Act would allocate some $2 billion for state workforce agencies to upgrade their computer processing systems.

Until states can implement that, the Republican plan calls for two months where unemployment beneficiaries would receive a flat $200 a week on top of what they would otherwise receive at the state level.

Labor Secretary Eugene Scalia said, “the great majority [of states] indicated they can get this done within eight weeks.” States can apply for a waiver from the Department of Labor “if they’re not able to achieve it” within eight weeks, he said in a CNBC interview on Tuesday.

Opinion: Killing the $600 unemployment benefit is a boneheaded move

The HEALS Act would allocate some $2 billion for state workforce agencies to upgrade their computer processing systems.

Scalia said that one proposal put forth by Senate Minority Leader Chuck Schumer and Senator Ron Wyden, a Democrat from Oregon, which ties unemployment benefits to state unemployment rates, would have “required more changes by states.”

The time lag to switch over to the 70% wage-replacement payout formula is related to the fact that so many people receiving unemployment benefits are self-employed or are gig workers, said Wayne Vroman, an economist at the Urban Institute, a left-leaning policy think tank.

Under the $2 trillion stimulus package, known as the CARES Act, these types of workers became eligible for unemployment benefits. Without the CARES Act, they would have been ineligible.

Unlike traditional salaried workers, self-employed and gig workers often have volatile incomes that are not automatically reported to state workforce agencies.Therefore, state workforce agencies “would have to request that information from an applicant from their 1099 tax form,” Vroman said.

(A 1099 tax form is often used in place of a W2 form to report earnings to the government for a person who is not an employee, according to the Internal Revenue Service.)

“Those forms would serve as a source of income but they are much more difficult to get a hold of,” he said, and would likely require state workforce personnel to speak individually with unemployment beneficiaries.


‘The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession.’


— Senate Minority Leader Chuck Schumer

If unemployment benefits are distributed based on claimants’ prior wages, “new capacity would need to be created to receive and analyze earnings data for self-employed workers,” the National Association of State Workforce Agencies said.

But many states like Florida are already struggling with processing jobless claims in a timely manner. As a result, more than 55,000 Floridians who were eligible missed out on the $600 a week boost in unemployment benefits, CNBC reported.

The Department of Economic Opportunity, which administers unemployment benefits in Florida, recently cut nearly 1,000 contracted call center workers.

The agency told MarketWatch it is “actively monitoring the discussions being made by Congress to possibly extend Federal unemployment benefits and will work diligently with the U.S. Department of Labor to serve Floridians.”

Vromen suspects that states which supplement their workforce agencies with more funding on the state level as opposed to relying on federal funds would adjust more easily to the 70% wage replacement formula if the Republican proposal is signed into law.

Also see: Republicans and Democrats both want another round of stimulus checks — but here’s where they disagree

House and Senate Democrats hold that the Republican proposal for unemployment benefits unfairly penalizes Americans who are unemployed due to the pandemic. “If you’ve lost your job through no fault of your own Republicans want you to take a 30% pay cut,” Chuck Schumer, a New York Democrat, said Monday.

“The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession,” he said on the Senate floor.

Schumer and House Speaker Nancy Pelosi, as well as many other Democratic lawmakers, have been urging Republicans to consider the HEROES Act, a $3 trillion stimulus package House Democrats passed in May.

That proposal, among other things, would extend the extra $600 federal unemployment benefit to January 2021.

The Congressional Budget Office found that if these benefits were extended through January 2021, an estimated five of every six recipients would receive more in benefits than they would from working those six months.

Republicans say that would act as a disincentive for beneficiaries to return to work. Democrats however hold that there aren’t enough jobs out there for unemployed people to fill.



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