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FMG Law Blog Line

PA Supreme Court Rules Uber Drivers Entitled to Unemployment Benefits

Posted on: August 7th, 2020

By: Erin Lamb

In Lowman v. Unemployment Compensation Board of Review, the Pennsylvania Supreme Court has ruled 5-2 that Uber drivers are not engaged in independently owned businesses when driving for Uber and are therefore eligible for unemployment benefits. The ruling is expected to open the gates for more “gig economy” workers to not only claim unemployment benefits, but also bring workers’ compensation claims.

The Uber driver had lost his job as a behavioral health specialist and applied for unemployment benefits. While awaiting that determination, he began working as an Uber driver. A month later, the Unemployment Compensation Service Center determined he was ineligible for benefits because of his agreement with Uber. The Commonwealth Court, which is the appellate court for certain cases in Pennsylvania that largely arising out of actions of the government, reversed the decision. However, in upholding that decision the Supreme Court went further in its analysis. The Commonwealth Court decision had still focused on the driver’s own actions and whether they were taken to further self-employment.

The Supreme Court decision, authored by Justice Donohue, eschewed that traditional analysis and instead focused on the company’s relationship with the drivers. The opinion focused on factors that showed that the company controlled the driver and found them dispositive when compared to the factors that indicated the drivers could operate independently. Uber argued that its contract with the driver referred to him as an independent contractor and he used his own car and cellphone, showing that the driver controlled his own employment. Justice Donohue found that the mere fact that drivers use their own cellphones and vehicle was immaterial when the “fundamental tool” necessary to provide driving services is the Uber Driver App and only Uber provides the app. Without it, drivers can provide no service. It is the sole method that drivers can use to connect, meet, and/or interface with passengers. To receive the Driver’s App, the driver must apply to Uber through Uber’s own application process. Drivers also have no control over the customer base, and was prohibited from subcontracting out his account to another driver. Justice Donohue also noted that Uber monitors, reviews, and supervises the drivers’ performance, and that Uber sets the pay structure.

Chief Justice Saylor dissented, with Justice Mundy joining.

If you have questions or would like more information, please contact Erin Lamb at [email protected].

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