Many laid off workers turn to “gig” work to help put food on the table, but few realize that work could jeopardize their unemployment benefits. On Friday, July 24th in midst of record layoffs due to the COVID-19 pandemic the Pennsylvania Supreme Court ruled that an unemployed worker who had already qualified for unemployment compensation benefits cannot be disqualified as “self-employed” when he then starts driving for Uber.  Lowman v. Unemployment Compensation Board of Review, 41 EAP 2018. 

In an opinion that breaks new ground, the Supreme Court held that Uber “controlled and directed the performance of Lowman’s services as a driver-for-hire” and that Mr. Lowman was not engaged in an independently established business. 

“This decision changes the legal landscape for ride-hailing drivers,” says Julia Simon-Mishel, Supervising Attorney at Philadelphia Legal Assistance who has litigated the case from its start in 2015.  “In one of the first high court opinions to analyze the factual relationship between Uber and a driver, the Court struck a blow to the claim that these drivers are independent contractors and instead found that Mr. Lowman’s work driving for UberX was done ‘in employment.’ My client, and others like him, have long been harmed by the illusion that they have freedom from control in their driving services.” 

Philadelphia Legal Assistance represents low-wage workers who engage in work through the “gig” economy, most of whom drive for Uber or Lyft.  Not only has this work previously not qualified them to receive state unemployment benefits when they cannot drive, but it has also caused the Department of Labor and Industry to proactively disqualify them based on “self-employment,” even when they have qualified for benefits based on their primary job.   

A determination about self-employment in the unemployment benefit context attempts to identify individuals who are in business for themselves and therefore not truly unemployed.  

Mr. Lowman was granted UC benefits after losing his job in the behavioral health field.  He then began driving for UberX and reported his earnings to the Department.

Uber has argued that Mr. Lowman should be disqualified from his benefits from his original job on the grounds that his driving on its platform was “self-employment.”  Mr. Lowman argued that his work for Uber was not self-employment and therefore he was entitled to receive partial benefits just like a worker who had picked up a part-time retail job.    

Donald Lowman Jr., the UberX driver in the case, felt strongly about pursuing the case all the way to the Supreme Court, explaining “getting disqualified from benefits because I drove for Uber was financially stressful and challenging.  It was detrimental to my family, especially after I lost the ability to drive due to a car accident. I felt the need to challenge the determination; it was important for me, my family and other rideshare drivers who may face similar challenges. The decision was worth fighting for.” 

By a 5-2 majority, the Supreme Court affirmed the Commonwealth Court, which had unanimously found in the UberX driver’s favor. After an in-depth review of the evidence of Uber’s relationship with Mr. Lowman, the Court cut through the pretense that Mr. Lowman is a “partner” of Uber and instead recognized the reality that Mr. Lowman’s work was not only controlled by Uber, but dependent on Uber.  Importantly for other ride-hailing drivers, the Court focused on Uber’s actions and communications towards Mr. Lowman, which remain consistent across the Uber platform for all drivers. 

Uber, which has been involved in the case from the beginning, continued to argue in the Pennsylvania Supreme Court that Mr. Lowman’s driving for the company constituted self-employment.  Despite Uber’s attempts to categorize drivers as being “in business” for themselves, the Court identified that Uber’s right to control Mr. Lowman was not illusory and instead was clearly laid out in Uber’s own written agreement. 

The Court recognized that “[i]n the virtual world in which Uber operates, it monitored and supervised Lowman’s provision of driving services.”  The Court also rejected the argument that Mr. Lowman’s ability to choose his own hours defined the nature of the employment relationship, finding “[t]he fact that Uber’s business model does not require regularly scheduled work hours from its workforce does not translate into an automatic independent contractor relationship.” 

“Mr. Lowman’s work for Uber can now be considered the same as finding a job in retail, in that his earnings will reduce his unemployment benefits instead of completely disqualifying him,” explains Simon-Mishel. “While this case was litigated under the self-employment provision of Pennsylvania Unemployment Compensation Law, the Supreme Court’s comprehensive analysis under the test for ‘employment’ opens the door for an UberX driver to obtain unemployment benefits if they can no longer drive for Uber. This watershed decision is an important step in preventing gig employers like Uber from cutting the safety net from underneath its workers.”  

The majority opinion can be found here.  The dissenting opinion can be found here.