475 F.Supp.3d 144
E.D.N.Y.2020Background
- Plaintiffs: four app‑based for‑hire vehicle (FHV) drivers and New York Taxi Workers Alliance (NYTWA) sued Governor Cuomo, NYDOL, and the Commissioner under § 1983, alleging violation of the Social Security Act’s “when due” clause and the Equal Protection Clause for delaying/denying unemployment insurance (UI) benefits.
- NYDOL practice: initial UI monetary determinations (MBDs) rely primarily on employer‑submitted wage data; absent employer reporting, MBDs often show $0.00 and result in denials.
- App‑based FHV companies (Uber, Lyft, etc.) frequently assert drivers are independent contractors and decline to report wages; they also commonly appeal NYDOL status determinations and then abandon appeals, impeding broad employer reporting/audits.
- Individual plaintiffs filed UI claims in March–April 2020 and experienced delays/denials despite submitting 1099s; many NYTWA members similarly affected during the COVID‑19 surge in claims.
- Procedural posture: plaintiffs sought a mandatory preliminary injunction compelling NYDOL to pay benefits or to require employer reporting / allow streamlined claimant self‑attestation; the court granted injunctive relief in part, ordering an NYDOL workgroup to clear reconsideration backlogs, expedite processing of 1099 submissions, update procedures (including a new application), and render timely MBDs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NYDOL violated the Social Security Act “when due” clause by delaying/denying UI to FHV claimants | NYDOL’s exclusive reliance on employer reporting when employers refuse to provide wages caused systemic, avoidable delays; NYDOL must take initiative to obtain other sources (e.g., 1099s) | Benefits are not "due" until administratively determined; NYDOL lacked authority under NY Lab. Law §571 to compel employers to report | Court: Plaintiffs showed a clear and substantial likelihood of success; NYDOL’s practices violated the “when due” requirement because it failed to obtain available non‑employer information and caused avoidable delays. |
| Whether plaintiffs established irreparable harm for preliminary injunctive relief | Protracted denial/delay of subsistence UI benefits causes immediate, irreparable harm to indigent claimants and forces NYTWA to divert resources | Claims are moot or cured because some plaintiffs later received benefits or federal CARES Act programs (PUA/FPUC) provide relief | Court: Irreparable harm established; voluntary cessation and potential future losses prevent mootness; PUA/FPUC do not cure the violation or substitute for correct state UI payments. |
| Scope of requested relief (require employers to report or allow claimant self‑attestation; immediate payment) | Seek mandatory relief: immediate payment to claimants, compel app‑based employers to provide wage data or permit claimant self‑attestation to establish monetary eligibility | NYDOL lacks statutory power to compel employers; ordering employers to report would exceed court’s role | Court: Granted narrower, mandatory relief directed at NYDOL operations—creation of a workgroup, clearing reconsideration backlog, expedited processing of 1099 submissions and faster MBDs—but did not order employers broadly compelled to report or adopt wholesale self‑attestation. |
| Plaintiffs’ Equal Protection claim | Alleged disparate treatment of FHV claimants | Not reached substantively | Court declined to address equal protection claim after finding a clear likelihood of success on the “when due” claim. |
Key Cases Cited
- Benisek v. Lamone, 138 S. Ct. 1942 (2018) (preliminary injunction is an extraordinary remedy)
- Tom Doherty Assocs., Inc. v. Saban Entm’t, Inc., 60 F.3d 27 (2d Cir. 1995) (mandatory injunctions require a higher showing of likelihood of success)
- Fusari v. Steinberg, 419 U.S. 379 (1975) ("when due" clause requires prompt provision of benefits; benefits are not contingent solely on administrative determinations)
- California Dep’t of Human Resources Dev. v. Java, 402 U.S. 121 (1971) (state procedures that unreasonably delay UI payments violate § 303(a)(1))
- Pennington v. Didrickson, 22 F.3d 1376 (7th Cir. 1994) (rejecting a reading that would nullify the "when due" clause)
- Wilkinson v. Abrams, 81 F.R.D. 52 (E.D. Pa. 1978) (states owe a duty to administer UI systems to ensure payment "when due")
- Morel v. Giuliani, 927 F. Supp. 622 (S.D.N.Y. 1995) (protracted denial of subsistence benefits constitutes irreparable harm)