HARRISBURG – Once-unemployed individuals who found work as drivers for ride-share service Uber may now be eligible for unemployment compensation, a majority complement of the Supreme Court of Pennsylvania ruled on July 24.
A 5-2 split of the Supreme Court found in favor of plaintiff Donald Lowman, thereby affirming a prior ruling determined in the Commonwealth Court of Pennsylvania on Jan. 24, 2018, which in turn had reversed a decision made by the Unemployment Compensation Board of Review on April 22, 2016.
Lowman once worked as a behavioral health specialist but found himself unemployed, and subsequently applied for unemployment benefits in June 2015. While his claim was pending, he agreed to drive for Uber the following month. That August, the Unemployment Compensation Service Center denied his claim, believing that his working for Uber made him ineligible for benefits.
The Unemployment Compensation Board of Review upheld that decision in April 2016, leading Lowman to appeal to the Commonwealth Court of Pennsylvania. That body reversed the UCBR’s decision and declared Lowman eligible to receive unemployment compensation in January 2018, leading UCBR to appeal to the Supreme Court.
The Supreme Court’s majority opinion was authored by Justice Christine Donohue and said Donald Lowman should receive unemployment benefits, as he was not “engaging in an independently established trade, occupation, profession or business” in his driving duties for Uber.
The crux of the case lay with the issue of who controlled the relationship Lowman and Uber maintained, along with the factors that supported the concept that either Lowman or Uber was the controlling party.
Lowman argued that he needed Uber’s Driver App in order to work for the company, while Uber countered that its agreement with Lowman classified him as an independent contractor and he provided his own car and cell phone for work.
Donohue, speaking for herself and colleague justices Debra Todd, Max Baer, David N. Wecht and Kevin M. Dougherty, said it was Uber who controlled the arrangement, since Lowman was required to download the Driver App to work for Uber and could provide no services to riders without it.
“Although the Driver App allows a driver to provide rides for remuneration, Uber generated the passenger leads, unilaterally determined the passenger fares and the driver’s percentage, collected the fares, retained its service fee, and then paid Lowman,” Donohue said.
“Uber exercised total control over the provision of service because Lowman personally had to fulfill the passenger assignment. He could not hire a substitute driver to provide a ride to a passenger identified by Uber.”
It is this primary relationship of control that the majority opinion examined.
“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 cell phone 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.”
Supreme Court Chief Justice Thomas G. Saylor and Justice Sallie Updyke Mundy dissented from the majority, with Saylor authoring the dissent.
“The majority, in my view, attributes substantial weight to those which suggest appellee was subject to Uber’s control, but does not assign sufficient import to those militating against such a finding,” Saylor said.
“I also find it salient that, although Uber mandated that appellee fulfill ride requests at least once each month, one ride per month is a particularly lax requirement and, as such, does not seem consistent with anything more than de minimus control by Uber. Just as important, appellee had the flexibility to choose which days or hours he wanted to work, and he was free to accept or decline any specific ride request.”
Supreme Court of Pennsylvania case 41 EAP 2018
Commonwealth Court of Pennsylvania case 686 C.D. 2016
Unemployment Compensation Board of Review cases B-15-09-H-3978 and B-586362-A
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com