Court Rules Uber Driver Should Get Unemployment Insurance

The Pennsylvania Supreme Court has waded into the debate over how to classify some gig workers with a decision it handed down in July, finding an Uber driver is not exactly an independent contractor.

The decision was made in the case of a man who was trying to get unemployment insurance, but was denied on the basis that state officials considered him to be self-employed and ineligible. The majority of the justices said the nature of the relationship between Uber and its drivers is such that the workers are not entirely independent.

Background of the Unemployment Insurance Case

The plaintiff in the case, Donald L. of Philadelphia, was a former behavioral therapist who lost his job and applied for unemployment insurance benefits in June 2015. The following month, while waiting for his claim to be processed, Donald started driving for the ride-share company Uber. He drove most days and earned approximately $350 a week, which he reported to the unemployment claims service as required by law, according to court records.

About a month later, Donald was informed by the Unemployment Compensation Service Center that he was no longer eligible for continued benefits. In the notice of determination sent to him, the unemployment center said Donald’s denial of benefits was due to the fact that he was now self-employed.

Typically, when a person loses their job and applies for unemployment insurance benefits, they are paid – or not – in relation to their previous job and the unemployment taxes paid by their previous employer. If that person goes on to work for a new employer and continues to claim unemployment benefits, claims officials then base worker eligibility on the new employer and wages.

Self-employed workers do not usually qualify for unemployment insurance benefits.

Donald appealed his case first to the Unemployment Compensation Board of Review, which upheld his denial, and then Commonwealth Court of Pennsylvania, which ruled in his favor, according to an article about the case by the Pennsylvania Record. The Unemployment Compensation Board of Review then appealed the decision to the state’s Supreme Court.

Central Issue of the Case

The central question put by this case is whether, as an Uber driver, he was self-employed or working for the rideshare company. A majority of the justices said Donald was not self-employed.

Justice Christine Donohue wrote the majority’s opinion saying, based on a review of Uber’s practices and requirements and the nature of the company’s relationship with its drivers, Donald “was not engaging in an independently established trade, occupation, profession or business” while driving for Uber.

The key factor in leading to that decision, the justice said, was the amount of control Uber maintains over its drivers. Donald could not work without using Uber’s “Driver App,” which coordinates the fares and assigns drivers, and had no control over the fares charged.

Uber says it considers drivers to be independent contractors who control when and where they drive and provide their own equipment.

Precedent and Possible Effects

The decision in this case may have far-reaching effects.

“The ruling does not make every app-directed worker a full employee overnight,” an article by the Pennsylvania Capital-Star said, but it “does the next best thing: it builds the legal scaffolding for lawsuits and regulatory actions to expand gig workers’ workplace protections and access to the social safety net.

In July, Massachusetts Attorney General Maura Healey filed a lawsuit against Uber and its biggest competitor, Lyft, in an effort to have the court deem the drivers to be employees, entitled to at least minimum wage and standard employee benefits, the Boston Herald reported.

Meanwhile, the California legislature passed a law in 2019 based on a state Supreme Court decision there that set a new standard by which workers would be classified as independent contractors or employees. The law went into effect in January 2020 and, in May, Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Francisco, and San Diego sued Uber and Lyft over what they claim is the “misclassification” of drivers as independent contractors.

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If you are an Uber or Lyft driver (active or inactive), you may have been misclassified as an independent contractor, and you may qualify to join this Uber Lyft Driver Misclassification Class Action Lawsuit Investigation.

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This article is not legal advice. It is presented
for informational purposes only.