New York must pay Uber and Lyft drivers unemployment benefits after an 'inexcusable delay,' a federal judge ruled

• A federal judge in New York ruled Tuesday that the state must quickly pay unemployment benefits to Uber and Lyft drivers, earlier reported by The New York Times.
• Drivers and an advocacy group sued the state, saying it was taking too long to pay drivers, and Tuesday's ruling requires the state to clear its backlog within 45 days as the case proceeds in court.
• Drivers have struggled to receive unemployment during the pandemic and have blamed Uber and Lyft for failing to provide earnings data to states that would speed up the process.
• The lawsuit argues that the state has failed to force Uber and Lyft to turn over that data, while the state says that Uber and Lyft have played "games" with their requests.
• The ruling the latest legal victory for drivers as they continue to seek unemployment insurance and other benefits typically guaranteed to traditional employees.

A federal judge in New York issued a preliminary injunction Tuesday requiring the state to urgently pay unemployment insurance to Uber and Lyft drivers who have been waiting months to receive benefits, earlier reported by The New York Times.

In the ruling, Judge LaShann DeArcy Hall said there had been an "an avoidable and inexcusable delay in the payment of unemployment insurance" to drivers. She gave the state 45 days to process pending and incorrectly denied claims, and ordered it to form a team of around 35 employees to expedite the work.

In May, Uber and Lyft drivers, along with the advocacy group New York Taxi Workers Alliance, sued the New York Department of Labor, alleging that it took several months to pay drivers, if they were to be paid at all, despite the DOL processing claims from other eligible workers in two to three weeks.

The lawsuit, which was filed in the US District Court for the Eastern District of New York, also argued that the state hadn't done enough to force Uber and Lyft to turn over driver earnings data that would significantly speed up the process of determining who is eligible and how much they're owed.

Tuesday's ruling doesn't make a determination about those claims, but it does say the drivers have strong enough arguments and that they would suffer "irreparable harm" without the benefits, and therefore the state must pay them now while the case proceeds in court.

"We are closely reviewing the decision and considering all of our options," a spokesperson for NYDOL told Business Insider. "Regardless, the Department of Labor has been providing benefits to rideshare drivers in New York and is committed to continuing that support."

The state had argued in court documents that Uber and Lyft had slowed it down by playing "games" that kept it from getting access to the data it needed to process drivers' unemployment insurance claims. Without Uber or Lyft reporting their earnings to the state, drivers cannot get their claims approved.

In her ruling, Hall criticized the state for letting the companies "lead it by the leash," saying that despite the companies' "categorical refusal to provide wage and earnings information for drivers, it is the duty of NYDOL to obtain the necessary information."

A spokesperson for Uber told Business Insider the company "provided all data the NYDOL requested so they could give independent workers financial assistance."

Uber and Lyft drivers have previously accused the companies of withholding earnings information from states, preventing unemployment agencies from processing drivers' claims.

The companies have also challenged several states' rulings that drivers are eligible for traditional state unemployment benefits — which are more generous than benefits offered during the pandemic under the CARES Act. New York courts have ruled that drivers are eligible for the more robust state benefits.

Tuesday's ruling is the latest victory for drivers in a string of legal battles over their employment status, which has major implications for the types of unemployment and healthcare benefits as well as labor protections they're guaranteed under state and federal law.

In California, Uber and Lyft are facing a lawsuit from the state and several city attorneys general that seeks to force them to reclassify drivers as traditional employees, while Massachusetts' attorney general recently brought a similar case.

Lyft did not immediately respond to a request for comment about the ruling.