Opinion
No. 85 C.D. 2014
09-25-2014
Capital Meats, Inc., Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
In this appeal, Capital Meats, Inc. (Company) asks whether the Unemployment Compensation Board of Review (Board) erred in determining Marvin E. Taylor (Claimant) was not disqualified from receiving unemployment compensation (UC) benefits under Section 402(h) of the Unemployment Compensation Law (Law) (relating to ineligibility based on self-employment). Because we agree with the Board's determination that Company did not prove Claimant was customarily engaged in an independently established trade, occupation, profession or business, we affirm.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h).
Claimant filed an application for UC benefits after his separation from employment with a prior employer. He was deemed financially eligible and began receiving benefits.
After performing services for Company, Claimant reported $71.17 in wages. The Department of Labor and Industry (Department) subsequently denied Claimant continuing UC benefits pursuant to Section 402(h) of the Law, with a fault overpayment of $223 pursuant to Section 804(a) of the Law, 43 P.S. §874(a). Claimant appealed.
A referee held a hearing at which Claimant, and a witness, and Company's witness testified. Neither party was represented.
Based on the evidence presented, the referee found as follows. Claimant was last employed as a food sales trainee with Company from June 28, 2013 until July 3, 2013, his last day of work. Claimant received $71.17 in compensation for training from Company. Claimant filed an application for UC benefits effective May 12, 2013, and was deemed financially eligible for benefits with a weekly benefit rate of $227 and a partial benefit credit of $69.
Prior to working for Company, Claimant worked as a home health aide, driver, deliverer and cleaner, greeter and bus driver. Claimant had no background in sales before working for Company.
Claimant responded to Company's advertisement which stated he could earn between $500 and $800 per week in a delivery job. Claimant applied for the job, believing it was a delivery job rather than a sales job. Claimant attended training, but he did not pursue further work for Company. Had Claimant pursued further work for Company, he would have received earnings based solely on the profits he received on the sale of meat. Claimant did not make any sales during his brief period of employment. Pursuant to a written agreement with Company, Claimant rode in a truck leased by coworkers. Claimant did not use any of his own equipment while working for Employer.
In determining Claimant was not disqualified from receiving UC benefits under Section 402(h) of the Law, the referee determined (with emphasis added):
In this case, [C]laimant offered testimony and documentary evidence proving he has no background in sales and briefly worked as a trainee for [Company] without accomplishing any sales. [C]laimant explained that he responded to an advertisement by [Company] that indicated that he would make between $500 and $800 per week for what [C]laimant believed was a delivery job. [C]laimant offered a pay stub for the record that showed he was issued payment from [Company] in the amount of $71.17 for his training. The [r]eferee finds [C]laimant's testimony credible. [C]laimant confirmed that he did not personally lease a truck or otherwise use his own equipment in this position.
[Company] did not offer any evidence to prove [C]laimant is customarily engaged in a trade, occupation, business or profession in sales of meat or any other product. There is no competent evidence in the record to prove [C]laimant meets the criteria for an independent contractor as set forth ... in the [Law]. Therefore, [C]laimant will not be
disqualified from receiving benefits under Section 402(h) of the [Law]. ...Referee's Op., 10/4/13, at 2. The referee also determined there was no overpayment under Section 804(a) of the Law.
On Company's appeal, the Board adopted the referee's findings and conclusions. Company now petitions for review to this Court.
In addition, the Board determined Claimant was engaged in "casual employment" under Section 4(l)(4)(3) of the Law, 43 P.S. §753(l)(4)(3), because Company's business involves supplying food products to distributors and does not include distributing food products. As a result, the Board stated, Company may be interested in applying for relief from charges. Company does not address this determination in the Board's decision. Rather, Company only addresses the Board's determination under Section 402(h) of the Law (relating to ineligibility based on self-employment). Thus, we do not address the Board's statement regarding Section 4(l)(4)(3) of the Law.
On appeal, Company maintains Claimant was, at all relevant times, a self-employed individual and, therefore, he is ineligible for UC benefits. Company argues it entered into various agreements with Claimant that designated Claimant an "independent contractor." Reproduced Record (R.R.) at 47a, 55a. More importantly, Company contends the parties in fact arranged their affairs and conducted themselves in such a way that Claimant's status far more resembled that of an independent contractor than that of an employee. Because Claimant was self-employed, Company asserts, this Court should reverse the Board's decision and deny Claimant UC benefits.
Our review is limited to determining whether the necessary findings of fact were supported by substantial evidence, whether errors of law were committed, or whether constitutional rights were violated. Quality Care Options v. Unemployment Comp. Bd. of Review, 57 A.3d 655 (Pa. Cmwlth. 2012).
Pursuant to Section 402(h) of the Law, an employee is ineligible for benefits for any week in which he is engaged in "self-employment." The Law does not define the term "self-employment"; however Section 4(l)(2)(B) of the Law defines "employment" as follows:
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).
"Generally, there is a presumption in the Law that an individual receiving wages is an employee and not an independent contractor engaged in self-employment." Pasour v. Unemployment Comp. Bd. of Review, 54 A.3d 134, 137 (Pa. Cmwlth. 2012). However, an employer can overcome this presumption by establishing the claimant was: (1) free from control and direction in the performance of his service; and, (2) customarily engaged in an independent trade or business as to that service. Id. "Unless both of those showings are made, the presumption stands that one who performs services for wages is an employee." Minelli v. Unemployment Comp. Bd. of Review, 39 A.3d 593, 596 (Pa. Cmwlth. 2012) (en banc); see also Quality Care Options v. Unemployment Comp. Bd. of Review, 57 A.3d 655, 660 (Pa. Cmwlth. 2012) ("[T]his two-pronged test is conjunctive and both prongs must be satisfied in order for persons rendering services for wages to be considered independent contractors.") (Citation omitted). Whether a claimant was an employee or an independent contractor under Section 4(l)(2)(B) is a question of law subject to our review. Pasour.
While Company's arguments focus heavily on the first prong of the test, we discern no error in the Board's determination that Company did not prove the second prong, that Claimant was customarily engaged in an independent trade or business.
This Court holds that a claimant who is receiving UC benefits is not disqualified as an independent contractor where the claimant later accepts an occasional offer of a limited amount of work over a short period. See Minelli (claimant receiving UC benefits not disqualified by performing 22 hours of consulting work over a three-day period); Silver v. Unemployment Comp. Bd. of Review, 34 A.3d 893 (Pa. Cmwlth. 2011) (claimant receiving UC benefits not disqualified by performing consulting work as a non-agent independent contractor for a total of three hours over a five-month period); Teets v. Unemployment Comp. Bd. of Review, 615 A.2d 987 (Pa. Cmwlth. 1992) (claimant, who signed a distributor agreement to sell skin care products and earned commission of less than $6.00 from such activities, was not self-employed); see also Principle Diversified Bus. Grp. v. Unemployment Comp. Bd. of Review (Pa. Cmwlth., No. 1126 C.D. 2013, filed February 11, 2014) (Pellegrini, P.J.) (unreported) (claimant receiving UC benefits not disqualified where she received $28 in earnings over a one-month period while performing transcription services pursuant to independent contractor agreement). This is so because the Law requires that a claimant be customarily engaged in an independently established trade, occupation, profession or business in order to be considered self-employed. Minelli.
Here, after his separation from a previous employer Claimant began receiving UC benefits. F.F. No. 2; R.R. at 15a, 41a. Thereafter, Claimant worked as a food sales trainee for Company for five days during which he made no sales and received $71.17 in compensation. F.F. Nos. 1, 8. Claimant had no sales background prior to working for Company. F.F. No. 4. Similar to Minelli and Silver, Claimant's brief stint as a food sales trainee for Company is not sufficient to establish that Claimant was customarily engaged in an independently established trade or business and, thus, disqualified for UC benefits under Sections 402(h) and 4(l)(2)(B) of the Law. Accord Principle Diversified. Company does not address the Minelli/Silver line of cases.
Like the claimants in Minelli v. Unemployment Compensation Board of Review, 39 A.3d 593, 596 (Pa. Cmwlth. 2012) (en banc), and Silver v. Unemployment Compensation Board of Review, 34 A.3d 893 (Pa. Cmwlth. 2011), Claimant was eligible for and actually receiving benefits as the result of the loss of prior employment before he began his training with Company. Thus, as in Minelli and Silver the question presented here is not whether the work for Company itself would entitle Claimant to benefits, but whether it disqualified him from further receipt of the benefits he was already receiving (offset, of course, by the pay he received during the five days he trained with Company).
As we stated in Principle Diversified Business Group v. Unemployment Compensation Board of Review (Pa. Cmwlth., No. 1126 C.D. 2013, filed February 11, 2014) (Pellegrini, P.J.) (unreported), Company's remedy here is to seek relief from charges under Section 302.1 of the Law, added by the Act of June 17, 2011, P.L. 16, 43 P.S. §782.1.
While Company cites our Supreme Court's decision in Danielle Viktor, Ltd. v. Department of Labor and Industry, Bureau of Employer Tax Operations, 892 A.2d 781 (Pa. 2006), in Minelli, this Court explained (with emphasis added):
We point out ... that this Court, in holding that the second element of Section 4(l)(2)(B) has not been met under the facts of this case, is in no way departing from the three part test described by our Supreme Court in Viktor, [892 A.2d at 797-98], to determine whether one is engaged in an 'independently established trade, occupation, profession or business.' Rather, we are simply recognizing that the Law requires an additional element, that the claimant be customarily engaged in such trade or business in order to be considered self-employed. This element was not discussed in Viktor, or other cases which followed, because the persons found to be independent contractors in those cases were clearly engaged in ongoing business activities rather than an isolated or sporadic job(s).
Alternatively, Company asserts, if this Court determines there are not sufficient facts, or not sufficiently clear facts because the record is deficient, a remand is proper. To that end, Company points out the referee improperly believed some facts were not relevant to the issue at hand. For example, the referee dissuaded testimony regarding the lease of vehicles and payment of insurance, as well as testimony concerning work hours. Elsewhere, the testimony was simply jumbled and confusing.
Because we believe the record is sufficiently complete to allow this Court to decide the issue presented, we reject Company's alternative argument that a remand is appropriate.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 25th day of September, 2014, the order of the Unemployment Compensation Board of Review is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge
Minelli, 39 A.3d at 598.