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Are Uber and Lyft Drivers Really Independent Contractors?

Published on Feb 16, 2018 at 11:08 am in Rideshare Accidents.

Issues regarding the exact legal status of drivers for rideshare companies like Uber and Lyft are beginning to work their way into appellate courts.  Since our legal system is based on precedent, opinions by upper level courts are particularly useful for lawyers to predict how rideshare organizations should be treated at trial.

On January 24, 2018, the Commonwealth Court of Pennsylvania issued its opinion in the matter of Donald Lowman v. Unemployment Compensation Board of Review.  Mr. Lowman had been gainfully employed as a “behavioral health specialist” until June 2015.  He applied for unemployment compensation.  In August 2015, the Unemployment Compensation Service Center determined that Mr. Lowman was not entitled to benefits even though he had lost his job.  The basis for the initial conclusion was that his “enterprise” as an Uber driver rendered him ineligible for compensation.

There was then a hearing before a claims referee.  As part of the evidence, the agreement which Mr. Lowman had signed with Uber was submitted into evidence.  The referee affirmed the Unemployment Compensation Service Center’s decision and concluded that Mr. Lowman had become self-employed as an Uber driver and that disqualified him from receiving unemployment compensation benefits.  On further appeal to the Unemployment Compensation Board of Review, the Board affirmed the referee and later reaffirmed its adjudication following a request for reconsideration.

The basis of the Board’s decision was interesting.  It found that in order to be considered self-employed, Mr. Lowman had to be free from control or direction in the performance of his service and that he must be customarily engaged in an independently established trade, occupation or business.  The Board found that his work with Uber met both parts of that test because Lowman used his own mobile phone and vehicle while driving for Uber, he also paid for vehicle maintenance and fuel and he was required to carry insurance and be a licensed driver with a vehicle registered in his own name. Finally, because he set his own hours, the Board felt that his employment had all the manifestations of being self-employed.

Mr. Lowman took an appeal to the Commonwealth Court of Pennsylvania (one of two intermediate appellate courts which is just below the Pennsylvania Supreme Court in the hierarchy of Pennsylvania courts).  The critical issue in the case is whether Mr. Lowman had become self-employed.  If he had, he was then ineligible to receive unemployment compensation for any week in which he had been self-employed.  The appellate court disagreed with the Unemployment Compensation Board of Review’s finding that Mr. Lowman “was not connected to Uber in a subordinate manner or dependent upon Uber’s transportation services.”

The Court determined that individuals who are receiving unemployment compensation benefits often engage in temporary assignments to supplement their income or to assist them in finding full time employment.  It noted further that such assignments do not render a claimant ineligible for unemployment benefits.  All the part-time employment will do is reduce the amount of weekly benefits one is entitled to collect.

The Court explained further that the issue was whether Mr. Lowman took a positive step to embark on an independent trade of business which would have disqualified him for unemployment compensation benefits.  In fact, the findings that he earned approximately $350 per week driving for Uber, used his own mobile phone and vehicle, paid for vehicle maintenance and fuel, and was required to carry insurance, have a driver’s license and a registered vehicle, along with his ability to set his own hours did not reflect “a positive step” toward establishment of an independent business.  In conclusion, the Board found that his actions did not reflect “an entrepreneurial spirit” or “intentions of starting a new business or trade.”

How will this impact your case against Uber?  One of the most popular defenses that companies like Uber and Lyft try to use in accident cases is that the driver was an “independent contractor.”  This case is now one of the first appellate cases in Pennsylvania which will be quite persuasive to allow us to argue to trial judges that all the actions taken to become a rideshare driver do not create a relationship of somebody previously pigeon-holed as an “independent contractor.”  This is good news for your ability to pursue a claim against a rideshare company such as Uber or Lyft.

If you or a loved one have been injured in an accident involving an Uber or Lyft driver, please contact Rideshare Law Group for a free initial consultation about whether you have a claim. Our Uber accident lawyers and Lyft accident lawyers won’t hesitate to go up against either corporation to ensure your best recovery options.