Uber employees may receive unemployment benefits, Penn. Supreme Court rules
The high court's decision focused on the nature of the relationship between Uber and a driver.
Out-of-work persons who began driving for the rideshare giant Uber may receive unemployment benefits, Pennsylvania’s high court has ruled in a decision that some attorneys say could have a ripple effect for the broader gig economy.
On July 24, the Pennsylvania Supreme Court ruled 5-2 in Lowman v. Unemployment Compensation Review Board that Uber driver Donald Lowman was not engaging in an independently-established business when driving for the rideshare company. So he was, therefore, eligible to receive unemployment benefits. The decision upheld a ruling by the Commonwealth Court, which had reversed a decision from the Unemployment Compensation Review Board.
The high court’s decision, written by Justice Christine Donohue, focused on the nature of the relationship between Uber and Lowman, paying special attention to which factors showed the company had control over the driver and which factors indicated the drivers could operate independently.
Uber had argued, among other things, that its contract with Lowman referred to him as an independent contractor, and the fact that Lowman used his own car and cellphone indicated that the driver had control over his own employment. Donohue said those factors weighed less heavily than the fact that he needed the company’s application to work, that he had no control over the customer base, and that he would not have been able to subcontract out his account to another driver.
“While many cases have discussed and extracted indicia of control, we find the most weighty and thus dispositive factors in this case to include: the required application process; the inability to use a substitute to provide services; Uber’s monitoring, review and supervision of Lowman’s performance; pay structure; provision of tools and equipment,” Donohue said. “While the vehicle and cellphone as specified were provided by Lowman, these ‘tools and equipment’ were useless without the predicate tool necessary to provide driving services, Uber’s Driver App. This fundamental tool for the provision of the service was provided by Uber — without it, Lowman could provide no service. It was the sole means by which he connected, met, or interfaced with a passenger.”
Justices Debra Todd, Max Baer, David Wecht and Kevin Dougherty joined Donohue. Chief Justice Thomas Saylor wrote a dissenting decision, which Justice Sallie Mundy joined.
A side job is a side job
According to court records, Lowman worked as a behavioral health specialist but lost his job and applied for unemployment compensation benefits in June 2015. While he was awaiting a determination, he entered into a software license and online service agreement with Uber’s parent company and began working as an Uber driver in July 2015. About a month later, the Unemployment Compensation Service Center determined that Lowman was not entitled to benefits, finding that his agreement with Uber made him ineligible.
The Commonwealth Court reversed that, however, essentially saying that a side job was a side job, even if it had been entered into after loss of full-time work.
Julia Simon-Mishel of Philadelphia Legal Assistance, who represented Lowman, said the court not only “saw through” the many arguments gig employers often use to persuade courts that their workers are independent, but the fact that the majority focused its inquiry on Uber’s relationship with its drivers, rather than on whether the driver had taken steps toward engaging in self-employment, was also very significant.
Although the Commonwealth Court had focused on Lowman’s conduct, the high court used the two-prong test under Section 753, which looks to the degree a company controls a worker’s activities and the degree to which the worker is engaged in an independent business. According to Simon-Mishel and others, that test is also used in several areas of the law both in Pennsylvania and outside the state, which means Lowman could have broad ramifications for courts struggling with legal issues stemming from the gig economy.
“[The ruling] lays important groundwork for other types of legal advocacy for gig workers,” Simon-Mishel said. “The opinion focused on Uber and Uber’s conduct and communications, its actions, and the agreement, so it’s more widely applicable than if it focused only on the individual driver.”
In an emailed comment, a spokesman for Uber disagreed with the notion that the ruling will have broader ramifications about the employment status of its drivers.
“The court did not make a determination on the employment status of this driver, and the ruling does not say the driver was an employee,” spokesman Harry Hartfield said. “However, while this decision did not determine the driver’s status, we stand ready to work with the commonwealth to modernize our laws, so that independent workers receive new protections while maintaining their flexibility.”
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