The Pennsylvania Unemployment Compensation Law includes a presumption that out-of-work individuals are employees, not independent contractors (who aren’t eligible for UI benefits). It’s up to you—not the worker—to prove that he or she is an independent contractor.
To prove that, be prepared to convince the unemployment compensation referee of two things:
First, that your organization didn’t control how the person did the job. Second, that the service he or she rendered is one that customarily is an independent trade or business. The key is whether the individual is free to accept or reject a particular assignment offered by your organization.
Recent case: Michael Vaughn worked as a flag-car driver, escorting oversize vehicles as they drove on Pennsylvania roads. He worked under an independent contractor agreement with the Beacon Flag Car Company.
When work slowed, he filed for unemployment and was granted benefits as an employee. Beacon appealed, pointing out that Vaughn was free to accept or reject any assignments it made. Beacon said it was merely in the business of connecting drivers like Vaughn with clients who needed his services. Plus, Beacon said it never told Vaughn what routes to take or when to work.
The court sided with Beacon, saying it met its burden of proving that it didn’t control the details of Vaughn’s job. The court noted that Vaughn’s right to turn down work was a persuasive factor. True employees can’t reject assignments. (Beacon Flag Car Co. v. Unemployment Compensation Board of Review, No. 928 C.D., 2006, Commonwealth Court, 2006)