Under Section 402(h) of Pennsylvania unemployment law, claimants are ineligible for benefits for any week in which they are engaged in self-employment. If you’ve been denied UC benefits for being self-employed, our unemployment attorneys can help you.
Am I self-employed?
Pennsylvania law surrounding self-employment determinations can be unclear. However, courts have used a two-step test to determine whether a claimant is self-employed [1]:
First, the court asks whether a claimant is “free from direction or control from over the performance of such services both under his contract and in fact”.
Next, the court will ask whether the claimant is “customarily engaged in an independently established trade, occupation, profession, or business.”
There are a number of factors that determine whether a claimant is self-employed. Just because your position is described as an independent contractor does not mean you are ineligible for UC. [2] Similarly, whether you receive a W2 tax form does not automatically determine your eligibility for UC benefits. [3] To maximize your eligibility for UC benefits, contact an Employment Lawyer for a free consultation.
I worked in the gig economy! Can I collect UC?
In recent years, gig economy jobs have increased in popularity. Popular gig economy jobs include Uber drivers or GoPuff runners. If you have worked in the gig economy, you may be entitled to UC benefits. Given the popularity of gig economy jobs, this area of law is likely to undergo additional changes. A Pennsylvania unemployment attorney can help if you worked in the gig economy and were denied UC benefits.
In Lowman v. UCBR, the Pennsylvania Supreme Court found an Uber driver eligible for UC benefits. [4] This case is important for gig workers because it is the first time the Court addressed whether gig economy workers should be treated the same as independent contractors for UC. It is a recent decision, as the Court issued its opinion in July of 2020. Because of this case, a claimant who is “otherwise entitled to receive unemployment compensation benefits due to a separation from employment” may be eligible for UC benefits after picking up work from a company like Uber or DoorDash.
Because of Lowman, gig workers may be subject to additional questions about UC eligibility:
Did you start the gig economy job before or after being separated from traditional employment?
Did UC find you self-employed because of the gig economy job?
What is the nature of your employment (length of service, frequency of work)?
Are there requirements to work for this company?
What rules do you have to follow?
Were you subject to disciplinary rules?
Did the company give you instructions/tasks?
What if I own a business on the side?
Pennsylvania law recognizes a “sideline business” exception to self-employment restrictions on UC benefits. You may have a sideline business if you own a business in addition to your regular job. As the claimant, you have the burden of proving your sideline business is not self-employment.
To determine whether your business is a “sideline business”, Pennsylvania UC law asks [5]:
Was your side work done while you were engaged in employment?
Was this your primary source of income?
A.K.A., do you make more money at your primary job or sideline business?
Did you increase your involvement in the side business?
Did you actually expand your sideline business, or were you merely preparing to expand? [6]
Are you able and available for full-time suitable work?
The Unemployment Process, including sideline business determinations, can be complex and difficult to understand. Contact an Employment Lawyer for a free consultation. Reach us at (412) 626-5626 or lawyer@manesnarahari.com.
Sources:
[1]: Brown v. UCBR, 449 A.2d 869 (Pa. Cmwlth. 1982).
[2] Hartman v. UCBR, 39 A.3d 507 (Pa. Cmwlth 2012).
[3] Clark v UCBR, 129 A.3d 1272 (Pa. Cmwlth. 2015).
[4] Lowman v. Unemployment Comp. Bd. of Rev., 235 A.3d 278, 281 (Pa. 2020).
[5] “Self-Employment”, Pennsylvania Office of Unemployment Compensation (https://www.uc.pa.gov/unemployment-benefits/Am-I-Eligible/benefit-eligibility/Pages/Self-Employment.aspx)
[6] Dausch v. UCBR, 725 A.2d 230. 232 (Pa. Cmwlth 1999).
