concluding that the employer failed to satisfy the second prong where there was no evidence that the 17 claimant established a private enterprise or independent business through which he provided services to others
How later courts described this case
- concluding that the employer failed to satisfy the second prong where there was no evidence that the 17 claimant established a private enterprise or independent business through which he provided services to others
Written by the judges who cited it.
The opinion
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Jason Clark, :
Petitioner :
v. :
:
Unemployment Compensation :
Board of Review, : No. 2425 C.D. 2014
Respondent : Submitted: August 21, 2015
BEFORE: HONORABLE DAN PELLEGRINI, President Judge
HONORABLE MARY HANNAH LEAVITT, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION BY
JUDGE COVEY FILED: December 23, 2015
Jason Clark (Claimant) petitions, pro se, for review of the
Unemployment Compensation (UC) Board of Review’s (UCBR) December 1, 2014
order affirming the Referee’s decision denying Claimant UC benefits under Section
4(w)(2) of the UC Law (Law).1 Claimant essentially presents one issue for this
Court’s review: whether Claimant earned sufficient wages from employment during
the applicable period to qualify for UC benefits under Section 4(w)(2) of the Law.
After review, we reverse.
Claimant applied for UC benefits on March 31, 2013 following his
separation from work with Baptist Children’s Services. The Department of Labor
and Industry (Department) granted Claimant weekly benefits at a rate of $396.00. On
March 30, 2014, as Claimant’s initial benefits year was about to expire, he again
applied for benefits. On August 18, 2014, the Duquesne UC Service Center
determined that Claimant was not eligible for UC benefits under Section 4(w)(2) of
the Law. Claimant appealed, and a Referee hearing was held on September 19, 2014.
1
Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. §
753(w)(2).
On September 22, 2014, the Referee affirmed the UC Service Center’s determination.
Claimant appealed to the UCBR which affirmed the Referee’s decision denying
Claimant UC benefits under Sections 401 and 4(w)(2) of the Law.2 Claimant
appealed to this Court.3
Claimant argues that the UCBR erred in finding that he did not earn
sufficient income during the applicable period to qualify for UC benefits. He
contends that he supplied proof on several occasions that he exceeded the minimum
income required under Section 4(w)(2) of the Law during the relevant period.
Section 401(a) of the Law authorizes UC benefits to be paid to
employees who are or become unemployed and, inter alia, have been paid “wages for
employment” under Section 404(c) of the Law, 43 P.S. § 804(c) (relating to rate and
amount of compensation). 4 43 P.S. § 801(a). After a claimant has been eligible for
and received UC benefits in a preceding year, Section 4(w)(2) of the Law then
imposes an additional eligibility requirement:
2
43 P.S. § 801. Claimant sought reconsideration, which was denied as untimely.
3
“Our scope of review is limited to determining whether constitutional rights were violated,
whether an error of law was committed, or whether the findings of fact were unsupported by
substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa.C.S. § 704.” Turgeon v.
Unemployment Comp. Bd. of Review, 64 A.3d 729, 731 n.3 (Pa. Cmwlth. 2013).
4
Section 401(a) of the Law specifically states:
Compensation shall be payable to any employe who is or becomes
unemployed, and who--
(a) Satisfies both of the following requirements:
(1) Has, within his base year, been paid wages for employment as
required by [S]ection 404(c) of [the Law (relating to rate and amount
of compensation)].
(2) Except as provided in [S]ection 404(a)(3) [of the Law], not less
than forty-nine and one-half per centum (49.5%) of the employe’s
total base year wages have been paid in one or more quarters, other
than the highest quarter in such employe’s base year.
43 P.S. § 801(a).
2
An application for benefits filed after the termination of a
preceding benefit year by an individual shall not be
considered a Valid Application for Benefits within the
meaning of this subsection,[5] unless such individual has,
subsequent to the beginning of such preceding benefit year
and prior to the filing of such application, worked and
earned wages in ‘employment’ as defined in this [Law] in
an amount equal to or in excess of six (6) times his
weekly benefit rate in effect during such preceding benefit
year.
43 P.S. § 753(w)(2) (emphasis added). “A claimant has the burden of proving
financial eligibility for UC benefits.” Logan v. Unemployment Comp. Bd. of Review,
103 A.3d 451, 453 (Pa. Cmwlth. 2014). Thus, in order to meet this requirement,
Claimant had to demonstrate that he earned wages from employment totaling at least
$2,376.00 ($396.00 x 6) between March 31, 2013 and March 30, 2014.6
At the hearing, Claimant testified and furnished documentation that he
earned wages totaling $2,432.91 during the relevant period. See Notes of Testimony,
September 19, 2014 (N.T.) at 4; see also Ex. C-1. Claimant presented payment logs
reflecting that he was paid $1,393.00 for working on an as-needed basis for RDP
Enterprises as follows: May 2013 ($310.00), May 19, 2013 ($200.00), June 3, 2013
($80.00), June 10, 2013 ($50.00), July 14, 2013 ($50.00), July 31, 2013 ($215.00),
August 3, 2013 ($47.91), September 14, 2013 ($47.00), October 28, 2013 ($150.00),
November 11, 2013 ($200.00), November 24, 2013 ($150.00), December 19, 2013
5
A ‘Valid Application for Benefits’ means an application for benefits
on a form prescribed by the [D]epartment, which is filed by an
individual, as of a day not included in the benefit year previously
established by such individual, who (1) has been separated from his
work or who during the week commencing on the Sunday previous to
such day has worked less than his full time due to lack of work and
(2) is qualified under the provisions of section four hundred and one
(a), (b) and (d).
43 P.S. § 753(w)(1).
6
Before Section 4(w)(2) of the Law was amended effective January 1, 2013, a claimant only
had to earn six times his weekly benefit rate, whether or not it came from employment. However,
since the amendment, the subject earnings must be from employment.
3
($50.00), January 7, 2014 ($50.00), January 22, 2014 ($175.00), February 5, 2014
($200.00), February 24, 2014 ($75.00), May 15, 2014 ($250.00), June 2, 2014
($125.00) and June 5, 2014 ($55.00).7 See N.T. at 4-7; see also Exs. C-1, C-2. He
disclosed that RDP Enterprises did not issue an Internal Revenue Service (IRS) W-2
Form to him or deduct taxes from his pay, but rather he received and paid taxes under
an IRS Form 1099.8 See N.T. at 5-6.
In addition, Claimant stated and provided documentation that he was
paid $672.91 for maintenance and repair work on an as-needed basis for McPierce
LLC as follows: August 8, 2013 ($97.91), October 7, 2013 ($50.00), December 16,
2013 ($200.00), January 4, 2014 ($125.00), March 4, 2013 ($100.00) and June 3,
2014 ($100.00). See N.T. at 7; see also Exs. C-1, C-2A. Claimant acknowledged
that he did not receive a W-2 Form from McPierce LLC. See N.T. at 7.
Claimant further declared and supplied documentation that he earned
$75.00 from RP Vocational Rehabilitation LLC on October 9, 2013. See N.T. at 7-8;
see also Exs. C-1, C-3. Claimant also claimed to have earned more than $260.00
officiating track and field meets for Germantown Friends School, but acknowledged
that he could only verify earnings on April 8, 2014 ($97.50), May 14, 2014 ($65.00)
and May 17, 2014 ($97.50). See N.T. at 8; see also Exs. C-1, C-4. Claimant’s
payment documents expressly reflect that as an official, he was “an independent
contractor, not an employee of the league nor of the schools involved in the event.”
Ex. C-4.
Moreover, Claimant described that he provided grant writing and
consulting services for Emerging Ministries Corporation between September 2013
and December 2013, earning $750.00 (in the form of a $250.00 monthly stipend), and
7
Despite Claimant’s testimony that he performed clerical work for RDP Enterprises, the
check register reveals that he cleaned and landscaped. See N.T. at 5, Ex. C-2.
8
Federal tax law mandates employers to report wages paid to employees on a W-2 Form.
26 C.F.R. § 1.6041-2(a).
4
worked on an hourly as-needed basis in January and February 2014. See N.T. at 9-
12; see also Ex. C-1. Claimant contended that he provided documentation to the
Department of those wages, but he did not produce it at the hearing. See N.T. at 10,
12. Claimant believed he received a Form 1099 from Emerging Ministries
Corporation and submitted it to the Department. See N.T. at 12-13.
Based upon the evidence Claimant presented at the hearing, the Referee
calculated that Claimant documented only $2,268.00 in earnings from casual labor
between March 31, 2013 and March 30, 2014 as follows: $1,620.00 from RDP
Enterprises, $573.00 from McPierce LLC and $75.00 from RP Vocational
Rehabilitation LLC. Because the total amount was less than the $2,376.00 threshold,
the Referee denied Claimant’s application for UC benefits under Section 4(w)(2) of
the Law.
The law is well settled that “[i]n unemployment compensation matters,
‘the [UCBR] is the ultimate fact finder and is empowered to resolve conflicts in the
evidence and to determine the credibility of witnesses.’” Goppman v. Unemployment
Comp. Bd. of Review, 845 A.2d 946, 947 n.2 (Pa. Cmwlth. 2004) (quoting Owoc v.
Unemployment Comp. Bd. of Review, 809 A.2d 441, 443 (Pa. Cmwlth. 2002)).
Moreover,
[s]ubstantial evidence is relevant evidence upon which a
reasonable mind could base a conclusion. In deciding
whether there is substantial evidence to support the
[UCBR’s] findings, this Court must examine the testimony
in the light most favorable to the prevailing party, . . .
giving that party the benefit of any inferences which can
logically and reasonably be drawn from the evidence.
Sanders v. Unemployment Comp. Bd. of Review, 739 A.2d 616, 618 (Pa. Cmwlth.
1999). Here, the UCBR affirmed the Referee’s determination, but found that
Claimant documented $2,767.82 in earnings between March 31, 2013 and March 30,
2014 as follows: $2,119.91 from RDP Enterprises, $572.91 from McPierce LLC and
5
$75.00 from RP Vocational Rehabilitation LLC. Despite that Claimant’s earnings
exceeded the $2,376.00 threshold, the UCBR concluded that since Claimant did not
receive W-2 Forms for his earnings, he actually “earned no wages in employment,”
but rather was self-employed. UCBR Dec. at 2 (emphasis added).
Since Claimant provided no proof of wage earnings from Emerging
Ministries Corporation, and his only proof of earnings from Germantown Friends
School occurred outside the relevant time period, those purported wages were
properly excluded from the Referee’s and UCBR’s calculations. We agree that
Claimant documented that RP Vocational Rehabilitation LLC paid him $75.00,
and McPierce LLC paid him $572.91 during the applicable time period. However,
we disagree with the UCBR that Claimant was paid $2,767.82 between March 31,
2013 and March 30, 2014. Rather, based upon our calculations, Claimant established
that RDP Enterprises paid him $2,049.91 during that period.9 Thus, Claimant
proved that between March 31, 2013 and March 30, 2014 he was paid $2,697.82,
which clearly exceeds the $2,376.00 threshold.
The question remains, however, whether Claimant’s earnings were
“wages [from] ‘employment.’” 43 P.S. § 753(w)(2). The Law defines “[w]ages” as
“all remuneration . . . paid by an employer to an individual with respect to his
employment . . . . ” 43 P.S. § 753(x). “Employment” is defined therein as “all
personal service performed for remuneration by an individual under any contract of
hire, express or implied, written or oral[.]” 43 P.S. § 753(l)(1). The UCBR
determined that Claimant was self-employed because he did not receive W-2 Forms
and, thus, he “earned no wages in employment.” UCBR Dec. at 2.
9
This Court’s $2,049.91 calculation represents a $70.00 difference from the UCBR’s
$2,119.91 total. It appears that the UCBR included in its calculation a $70.00 payment made by
RDP Enterprises to “White Enterprises, Inc.” on February 2, 2014, which was erroneously
highlighted in the Referee hearing exhibit as a payment to Claimant. N.T. Ex. C-2 at 5.
6
We acknowledge that Section 402(h) of the Law provides that an
employee will be ineligible for benefits for any week in which he is self-employed.
“The term ‘self-employment’ is not defined in the Law; however, the courts have
relied upon [S]ection 4(l)(2)(B) of the Law, 43 P.S. § 753(l)(2)(B), to fill the void . . .
.” Beacon Flag Car Co., Inc. v. Unemployment Comp. Bd. of Review, 910 A.2d 103,
107 (Pa. Cmwlth. 2006). Section 4(l)(2)(B) of the Law states, in pertinent part:
Services performed by an individual for wages shall be
deemed to be employment subject to this act, unless and
until it is shown to the satisfaction of the [D]epartment that-
-(a) such individual has been and will continue to be free
from control or direction over the performance of such
services both under his contract of service and in fact; and
(b) as to such services such individual is customarily
engaged in an independently[-]established trade,
occupation, profession or business.
43 P.S. § 753(l)(2)(B) (emphasis added).10 “[T]he existence of an
employer/employee relationship is a question of law that depends upon the unique
facts of each case.” Res. Staffing, Inc. v. Unemployment Comp. Bd. of Review, 961
A.2d 261, 263 (Pa. Cmwlth. 2008). However, “there is a presumption in the . . . Law
10
Section 4(l)(2)(B) of the Law . . . mandates that in order for a
claimant to be an independent contractor, he or she must be
‘customarily engaged in an independently[-] established trade,
occupation, profession or business.’ 43 P.S. § 753(l)(2)(B)
(emphasis added). The statutory wording clearly provides for the
word ‘customarily’ to modify the word ‘engaged.’ ‘Customary’ is
defined as ‘based on or established by custom’ or ‘commonly
practiced, used, or observed.’ Merriam–Webster’s Collegiate
Dictionary 308 (11th ed. 2004). ‘Custom’ means ‘a usage or practice
common to many or to a particular place or class or habitual with an
individual’ or ‘repeated practice.’ Id. (emphasis added). ‘Engage’
is defined as ‘to employ or involve oneself; to take part in; to embark
on.’ Black’s Law Dictionary 608 (9th ed. 2009) (emphasis added).
Staffmore, LLC v. Unemployment Comp. Bd. of Review, 92 A.3d 844, 847-48 (Pa. Cmwlth. 2014).
7
that an individual receiving wages is an employee and not . . . engaged in self-
employment.” Training Assocs. Corp. v. Unemployment Comp. Bd. of Review, 101
A.3d 1225, 1233 (Pa. Cmwlth. 2014) (quoting Pasour v. Unemployment Comp. Bd. of
Review, 54 A.3d 134, 137 (Pa. Cmwlth. 2012)).
This Court has held that self-employment requires a positive act of
establishing a private enterprise or independent business. See Staffmore, LLC v.
Unemployment Comp. Bd. of Review, 92 A.3d 844 (Pa. Cmwlth. 2014); see also Kirk
v. Unemployment Comp. Bd. of Review, 425 A.2d 1188 (Pa. Cmwlth. 1981); Miller v.
Unemployment Comp. Bd. of Review, 405 A.2d 1052 (Pa. Cmwlth. 1979). “[T]he
fact that an unemployed person . . . accept[s] an occasional offer of work is simply
not enough to demonstrate that said individual is customarily engaged in an
independently established trade, occupation, profession or business[]” and, therefore,
self-employed.11 Minelli v. Unemployment Comp. Bd. of Review, 39 A.3d 593,
598 (Pa. Cmwlth. 2012) (quoting Silver v. Unemployment Comp. Bd. of Review, 34
A.3d 893, 898 (Pa. Cmwlth. 2011)).
In Minelli, the claimant signed a [consulting] contract as an
independent contractor. The contract specified that she was
‘free to perform services for other parties while’ working
for the employer. Id. at 596. In that case, the [UCBR]
specifically found that the claimant had no supervision and
worked with other independent contractors, and was paid by
the client. However, the claimant testified that she was not
and never was customarily engaged in an independently[-]
established trade or business. This Court reversed the
[UCBR], holding that despite the fact the claimant could
work for others, the evidence did not show the claimant was
customarily engaged in an independent business.
11
Even “a contract that on its face purports to establish an independent contractor
relationship may not necessarily establish an independent contractor relationship. Rather, findings
regarding the actual working relationship between worker and employer determine whether this
element is satisfied.” Kurbatov v. Dep’t of Labor & Indus., 29 A.3d 66, 70 (Pa. Cmwlth. 2011)
(citation omitted).
8
Similarly, and significantly, the record here lacks any
evidence that Claimant customarily engaged in an
independent business or performed programming services
for any other business. As in Minelli and Sharp [Equip. Co.
v. Unemployment Comp. Bd. of Review, 808 A.2d 1019
(Pa.Cmwlth.2002)], Claimant’s testimony is clear that he
was not so engaged, and there is no contrary evidence. The
single act of signing the consulting contract here does not
suffice. Sharp. The contract language providing that
Claimant could work for others does not establish that he
engaged in an independent business, and did work for
others. Minelli. Moreover, the scope of work requires
Claimant to work in Employer’s offices during specified
business hours, thus undermining his ability to work for
others. See Sharp. The test an employer must satisfy to
overcome the presumption of an employment relationship is
simply not met here.
Jia v. Unemployment Comp. Bd. of Review, 55 A.3d 545, 549 (Pa. Cmwlth. 2012).
Likewise, the evidence in this case did not overcome the strong
presumption that Claimant was an employee of RP Vocational Rehabilitation LLC,
McPierce LLC and RDP Enterprises. There is no evidence in this record that
Claimant had established a private enterprise or independent business through which
he provided services for RP Vocational Rehabilitation LLC, McPierce LLC and RDP
Enterprises. The mere fact that Claimant did not receive W-2 Forms from those
entities is not conclusive of self-employment.
In fact, in concluding whether an employment relationship exists, “[n]o
single factor is controlling, [] therefore, the ultimate conclusion must be based on the
totality of the circumstances.” Res. Staffing, Inc., 961 A.2d at 264. Thus, although a
W-2 Form may be one type of evidence that an individual earned wages in
employment and was not self-employed, this Court has found no precedent under
which such documentation was the only conclusive evidence of earnings
sufficient to satisfy Section 4(w)(2) of the Law. In Gakuba v. Unemployment
Compensation Board of Review (Pa. Cmwlth. Nos. 1089-92 C.D. 2012, filed March
9
27, 2013),12 this Court affirmed the UCBR’s denial of benefits under Section 4(w)(2)
of the Law where the claimant failed to provide any proof of earnings during the
relevant period. The Department’s witness in that case stated that the Department
would have accepted paystubs, a W-2 Form, a Form 1099, or even a letter explaining
the terms of claimant’s employment, dates and remuneration, together with cancelled
checks or some other payment documentation. Clearly, even the Department has
conceded that a W-2 Form is not the only evidence of an employment relationship.
Lack of a W-2 Form cannot alone be sufficient to establish independent
contractor relationship, especially because a W-2 Form is an employer-issued form.
As discussed above, each case must be decided on the totality of all the facts. Before
us is a strong presumption that an employment relationship existed between Claimant
and RP Vocational Rehabilitation LLC, McPierce LLC and RDP Enterprises. The
Department did not offer any evidence to overcome that presumption. Therefore, we
cannot agree that Claimant in this case “earned no wages in employment” simply
because he did not receive W-2 Forms from RP Vocational Rehabilitation LLC,
McPierce LLC and RDP Enterprises. UCBR Dec. at 2. Examining the credible
evidence in the light most favorable to the Department as we must, we hold Claimant
satisfactorily proved that between March 31, 2013 and March 30, 2014, he earned
wages from employment that exceeded the $2,376.00 threshold. Thus, Claimant was
eligible for benefits under Section 4(w)(2) of the Law. Accordingly, the UCBR erred
by concluding that Claimant failed to meet those eligibility requirements.13
12
This Court’s unreported memorandum opinions may not be cited as binding precedent;
however, they may be cited “for [their] persuasive value[.]” Section 414 of the Commonwealth
Court’s Internal Operating Procedures.
13
In light of this holding, we need not address Claimant’s contentions that his failure to
meet his eligibility requirements resulted from the Department’s improper directions and
negligence.
Notwithstanding, his argument is waived. In Claimant’s appeal from the Referee’s decision
to the UCBR, he stated:
10
Based upon the foregoing, the UCBR’s order is reversed.
___________________________
ANNE E. COVEY, Judge
Reason for appeal: All submitted evidence was not added in the total
that must have been earned in order to qualify for benefits. There
were (3) earning receipts provided and submitted into evidence (the
final exhibit I submitted) from Germantown Academy (interact
athletic league) school . . . totaling $225[.00], which is more than
enough to cover the difference cited in the decision and to reverse the
verdict.
Certified Record Item 8 at 3. Claimant did not raise Department misinformation or negligence in
his appeal to the UCBR, nor did he provide argument or evidence to that effect at the Referee
hearing. “[I]t is well settled that issues not specified in an appeal before the [UCBR] are waived for
purposes of review by this Court.” Tri-State Scientific v. Unemployment Comp. Bd. of Review, 589
A.2d 305, 307 (Pa. Cmwlth. 1991).
Even if not waived, this Court would not review this issue since Claimant’s arguments focus
upon Claimant’s base year calculations rather than his immediately preceding benefit year totals at
issue here.
11
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Jason Clark, :
Petitioner :
v. :
:
Unemployment Compensation :
Board of Review, : No. 2425 C.D. 2014
Respondent :
ORDER
AND NOW, this 23rd day of December, 2015, the Unemployment
Compensation Board of Review’s December 1, 2014 order is reversed.
___________________________
ANNE E. COVEY, Judge