Uber headquarters in San Francisco. (Photo: Jason Doiy/ALM)

An attorney for the ride-sharing tech company Uber urged the Pennsylvania Supreme Court on Wednesday to focus its consideration of an unemployment eligibility case on the specific meaning of "self-employment," not an assessment of emerging labor economics.

The case—captioned Lowman v. Unemployment Compensation Board of Review—presents the justices with their first opportunity to evaluate whether the legal view of unemployment eligibility should evolve as "gig" jobs proliferate.

Littler Mendelson's Paul Lantis, arguing the case for Uber, told the high court that the case is "not a referendum on the gig economy, or on Mr. Lowman's status on the Uber app."

Justice Christine Donohue, however, suggested that could be a difficult task.

"I'm hard-pressed to understand how this [claimant's] relationship with Uber is not crucial," Donohue said.

The justices agreed to take up the case after an en banc Commonwealth Court panel ruled 7-1 in January 2018 that a former behavioral health specialist should be entitled to unemployment benefits, despite earning money as a driver for Uber after he lost his job. That decision reversed a holding from the Unemployment Compensation Board of Review.

The UCBR had determined that the driver, Donald Lowman, could not receive the benefits because driving for Uber constituted "self-employment," but Judge Mary Hannah Leavitt said the board's reasoning was flawed, and there was no indication that he planned to enter into an independent business venture as an Uber driver.

According to Leavitt, Lowman worked as a behavioral health specialist, but lost his job and applied for unemployment compensation benefits in June 2015. While he was awaiting a determination he entered into a software license and online service agreement with Uber's parent company, and began working as an Uber driver in July 2015.

About a month later the Unemployment Compensation Service Center determined that Lowman was not entitled to benefits, finding that his agreement with Uber made him ineligible.

Focusing on the degree of dependence between Lowman and Uber, the review board agreed that Lowman was ineligible for the benefits. The board found that he was not a subordinate in the company, and could refuse assignments if he wanted, or could provide similar services for other companies.

Leavitt, however, said that analysis "misse[d] the mark." A side job, Leavitt indicated, was a side job, even if entered into after loss of full-time work.

Justice Max Baer, during the argument session, told the attorneys he thought Leavitt's reasoning seemed correct.

"If he is self-employed, then so is the kid who cuts grass for $10 a week," Baer said. "The statute doesn't make sense, respectfully, if you're going to apply it as cutting grass is self-employment."

Janet Tarczy, who represented the Unemployment Compensation Review Board, discussed the statute and the two-pronged test outlined in the law to determine whether someone is self-employed. That test focuses on whether the claimant is free from control in his or her performance and whether the claimant is "engaged in an independently established trade, occupation or business."

Donohue, however, said she thought there were problems with the statute, including a failure to define "self-employment."

"We're going to have to look at the statute," Baer said. "But it has to make sense."

Lantis suggested the court focus its test on whether the claimant is dependent on the employer or is free to engage in other employment.

"Just because an individual has one client doesn't mean he can morph himself into an employee," Lantis said.

Julia Simon-Mishel of Philadelphia Legal Assistance, however, said that under any of the tests suggested, Lowman would not be considered self-employed. According to Simon-Mishel, in order to be self-employed, a person needs to own or exercise a substantial degree of control over the business.

Under Uber's argument, she said, a dog-walker could be considered a self-employed businessman, but that, she said goes against the intent of the law and could lead to an absurd result.

However, Simon-Mishel was in agreement with Uber that the court should not narrow in on aspects of the gig economy, but should instead focus the case on what tests courts in Pennsylvania should be applying.

"This court has the opportunity to provide some real clarity," she said.