Recently, the Pennsylvania Supreme Court ruled that a rideshare driver was legally entitled to unemployment benefits, after ruling that Uber “controlled and directed the performance of the driver’s services as a driver-for-hire” and that the driver was not engaged in an independently established business. This case marks one of the few instances in which a higher court has closely examined the employer-employee relationship between a rideshare driver and the rideshare company. The case is Lowman v. Unemployment Compensation Board of Review.
Before seeking unemployment benefits, Donald Lowman was employed as a behavior therapist. During the summer of 2015, Mr. Lowman lost his job and applied for unemployment compensation. While his application for unemployment compensation was pending, he signed a services agreement with Uber. He began driving for Uber on July 1, 2015, and thereafter earned between $15 and $22 per hour, bringing in approximately $350 per week. As required by Pennsylvania’s unemployment laws, he reported his earnings to the Unemployment Compensation Service Center. On August 17, 2015, the service center issued a Notice of Determination finding that Lowman’s driving rendered him ineligible for continued benefits because he was considered self-employed.
Lowman appealed the decision and was again denied benefits. He subsequently filed a petition for review in the Commonwealth Court in 2016. The Court reversed the previous decision, concluding that Lowman was not self-employed. The case moved on, eventually reaching the Pennsylvania Supreme Court, which issued the final ruling.
In reviewing the question, the Pennsylvania Supreme Court examined the definition of self-employment. Under applicable Pennsylvania law, an employee shall be ineligible for compensation for any week in which he is engaged in self-employment. As such, the Court closely scrutinized the relationship that Uber had with its drivers to determine whether they were independent contractors.
Uber was involved in the case from the beginning, and continually argued 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.
After an in-depth review of the evidence of Uber’s relationship with Mr. Lowman, the Court rejected the argument that Mr. Lowman was a “partner” of Uber and instead recognized the reality that Mr. Lowman’s work was not only controlled by Uber, but dependent on Uber. Although Mr. Lowman used his own car and cellphone, and was responsible for his own maintenance, the Court found that he did not have control over his work for the following reasons:
- Uber established the rates that drivers charged
- Uber tracked the movements of its drivers using GPS technology
- Uber closely monitored the work of its drivers
- In essence, Uber controls its drivers much like a manager exerts control over employees in an office.
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.
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.”
The Court’s ruling was one of the first to advance the rights of freelance/gig workers. Although it is not a clean sweep or an assured future victory, it does make future legal challenges more possible.
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About Harrison Oldham
Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.
Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://