Opinion
No. 948 C.D. 2013
12-16-2013
Melvin J. Cook, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
Melvin J. Cook (Claimant) petitions pro se for review of an order of the Unemployment Compensation Board of Review (Board) finding him ineligible for unemployment compensation benefits under Section 402(h) of the Unemployment Compensation Law (Law) because his relationship with the Horsehead Corporation (Horsehead) was that of an independent contractor and not as an employee. Finding no error in the Board's decision, we affirm.
Section 402(h) of the Law provides: "An employe shall be ineligible for compensation in any week ... [i]n which he is engaged in self-employment." 43 P.S. §802(h).
Section 4(l)(2)(B) of the Law provides:
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 department 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).
Claimant, a Certified Public Accountant (CPA), entered into a consulting agreement with Horsehead on September 12, 2012, to provide short-term auditing services. He billed Horsehead for 336 hours of work between that date and November 12, 2012, when the project ended. Claimant then filed a claim for unemployment compensation benefits, which the Unemployment Compensation Service Center granted, and Horsehead appealed.
Before the Referee, Bruce Morgan (Morgan), Horsehead's Vice President of Human Resources, testified that Horsehead signed a consulting agreement with Claimant on September 12, 2012. He said that Claimant was paid $30.00 per hour. Morgan also noted that the agreement specified that Claimant was an independent contractor and not an employee of the company. He finally said that the company only intended Claimant to be a "CPA doing independent consulting for us." (Hearing Transcript dated February 13, 2013, at 7.)
Claimant testified that he was hired to conduct an audit "within the perimeters that's been [sic] established by the company's internal auditor." (Hearing Transcript dated February 13, 2013, at 6.) He said that he worked 336 hours over about eight-and-a-half weeks and knew that his contract was short-term. He said that he and the internal auditor discussed and decided on the audit procedures that would be best, and that he reported the results of his audit to Horsehead's internal auditor weekly. He further testified that he does not own his own business as a CPA, but over the last few years, he had done contract projects like the one with Horsehead with the hope that one of the companies will hire him as a full-time employee.
Based on the testimony and evidence, the Referee concluded that Claimant was ineligible for benefits on the basis that he was self-employed because he had control of his own hours and work; was minimally supervised; knew that the project he was working on was a short-term project; was paid by the hour; entered into an agreement that he was an independent contractor; and had been performing similar projects for several years with the goal of being hired as an employee by one of the companies for which he did projects. Claimant appealed to the Board, which affirmed on the basis that Claimant was free from control and performed his work in the manner he chose; negotiated his pay; worked out of his own home; and provided his own supplies; and, therefore, Horsehead had established that Claimant was an independent contractor. This appeal followed.
The Referee further determined that the decision was also based upon Section 4001 of the Emergency Unemployment Compensation Act of 2008, P.L. 110-252, 122 Stat. 2353, 26 U.S.C. §3304 Note, "which indicates that the terms and conditions of the UC Law which apply to claims of regular benefits and benefit payment shall also apply to claims of EUC benefits and benefit payment." (Referee's Decision and Order dated February 14, 2013, at 4.)
Our scope of review is limited to determining whether constitutional rights were violated, an error of law was committed, or findings of fact were not supported by substantial evidence. Myers v. Unemployment Compensation Board of Review, 533 Pa. 373, 376, 625 A.2d 622, 624 (1993). "Substantial evidence is relevant evidence that a reasonable mind might consider adequate to support a conclusion." Popoleo v. Unemployment Compensation Board of Review, 777 A.2d 1252, 1255 (Pa. Cmwlth. 2001). Absent an error of law or showing of fraud, the decision of the Board must be affirmed. Borman v. Unemployment Compensation Board of Review, 316 A.2d 679, 680 (Pa. Cmwlth. 1974).
On appeal, Claimant argues that the Board erred in finding that he was self-employed because there was no substantial evidence to establish that he was operating an independent auditing practice.
To determine whether an individual is self-employed so as to preclude awarding unemployment compensation benefits, Section 402(h) provides a two-pronged test. First, among other things, we must determine whether the claimant was free from control; whether compensation was a fixed rate and taxes were deducted; whether the putative employer supplied the tools necessary for the job; and the terms of the written contract between the parties. No single factor is controlling. Resource Staffing, Inc. v. Unemployment Compensation Board of Review, 961 A.2d 261, 264 (Pa. Cmwlth. 2008); Venango Newspapers v. Unemployment Compensation Board of Review, 631 A.2d 1384, 1387-88 (Pa. Cmwlth. 1993). The second prong calls for a determination of whether the services are customarily performed in an independent trade or business; considering whether the claimant was able to perform the same services for others or whether the nature of the business compelled the claimant to perform those services for only the alleged employer; and whether the claimant worked on a job-to-job basis. Quality Care Options v. Unemployment Compensation Board of Review, 57 A.3d 655, 662 (Pa. Cmwlth. 2012.)
As to the first prong, the Board found and the testimony and evidence of record supports that Claimant was paid $30.00 per hour to provide auditing services and submitted a bill for his services on a monthly basis, and that he paid his taxes on the income he received. Horsehead did not have any control over the time, place or manner in which Claimant performed his work. Claimant admitted that he was not regularly supervised and essentially consulted with the internal auditor at the outset of the project, then reported his findings on a once-a-week basis. The claimant questionnaire provides that he has his own tools and buys his own supplies and that he operates a business from his home, and while Claimant argues that Horsehead, in fact, provided the computer he used, this is not enough to establish an employment relationship. Finally, the contract between Claimant and Horsehead specifies that "[t]he parties agree that [Claimant] is not an employee of the Company ... and will act as an independent contractor in the performance of Consultant's duties under this Agreement and shall be free from control or direction by the Company." (Record Item No. 10 at 9.) Therefore, the Referee and Board did not err in determining that the first prong was satisfied.
In reviewing the Board's decision, its findings are conclusive on review so long as the record, taken as a whole, contains substantial evidence to support those findings. Popoleo, 777 A.2d 1255. "Substantial evidence is relevant evidence that a reasonable mind might consider adequate to support a conclusion." Id. This Court will review the record in a light most favorable to the party prevailing before the Board, giving that party the benefit of all reasonable and logical inferences in determining whether the findings are supported by substantial evidence. Stringent v. Unemployment Compensation Board of Review, 703 A.2d 1084, 1087 (Pa. Cmwlth 1997). As the ultimate fact finder, the Board is entitled to make its own determinations with regard to witness credibility and evidentiary weight. Popoleo, 777 A.2d at 1255.
With respect to the second prong, the Board concluded that Claimant could perform the work of a CPA "for anyone who wished to avail themselves of his services and the nature of the business of CPA does not compel [C]laimant to only look to a single Horsehead for a continuation of work." (Board's Decision and Order dated April 15, 2013, at 5.) Claimant admitted that he had engaged in several other, similar independent contractor positions; did not have to sign in or out with Horsehead; and was minimally supervised. Thus, the Board properly determined that the second prong was satisfied, and all findings and conclusions necessary to support this determination were supported by the record.
Accordingly, because it did not err in concluding that Claimant was not eligible for benefits under Section 402(h) of the Law, we affirm the order of the Board.
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 16th day of December, 2013, the order of the Unemployment Compensation Board of Review, dated April 15, 2013, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
DISSENTING OPINION BY JUDGE COHN JUBELIRER
Respectfully, although I agree with part of the Majority's analysis in this matter, I must dissent to the Majority's ultimate conclusion. I do not believe that Melvin J. Cook's (Claimant) employment with Horsehead Corporation (Horsehead) disqualifies him from continuing to receive unemployment compensation (UC) benefits. As explained by this Court, pursuant to Section 402(h) of the UC Law:
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(h).
[A] claimant is ineligible for unemployment benefits in any week "[i]n which [she] is engaged in self-employment." 43 P.S. § 802(h). Section 402(h) does not define the term "self-employment"; however, Section
4(l)(2)(B) of the Law defines "employment", in pertinent part, 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 department that--(a) such individual has been and will continue to be free from control or direction over the performance of such services both under [her] 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.
Minelli v. Unemployment Compensation Board of Review, 39 A.3d 593, 595-96 (Pa. Cmwlth. 2012) (en banc).
43 P.S. § 753(l)(2)(B). The purpose of Section 4(l)(2)(B) "is to exclude independent contractors from coverage." Beacon Flag Car Co., Inc. (Doris Weyant) v. Unemployment Compensation Board of Review, 910 A.2d 103, 107 (Pa. Cmwlth. 2006). "This provision presumes that an individual is an employee." Id. However, "this presumption may be overcome if the putative employer sustains its burden of showing that the claimant was free from control and direction in the performance of [her] service and that, as to such service, was customarily engaged in an independent trade or business." Id. "Unless both of these showings are made, the presumption stands that one who performs services for wages is an employee." Id.
"A determination as to the existence of an employer/employee relationship is a question of law that depends on the unique facts of each case." Quality Care Options v. Unemployment Compensation Board of Review, 57 A.3d 655, 660 (Pa. Cmwlth. 2012).
Here, I agree with the Majority that the evidence presented supports the determination that Claimant was free from control and direction in the performance of his services for Horsehead. However, I disagree that the evidence supports a finding that Claimant was customarily engaged in an independent trade or business.
As found by the Board, Claimant opened a claim for UC benefits on February 28, 2010. (Board Op., Findings of Fact (FOF) ¶ 1.) This Claim Record shows that Claimant's separating employer in 2010 was Exico, Inc., and that he continued to receive UC benefits during the calendar year 2012. (Claim Record, R. Item 1.) Therefore, Horsehead was not Claimant's separating employer for purposes of determining whether Claimant was eligible for UC benefits upon completion of the short-term auditing services he agreed to perform for Horsehead. As such, this is not a case where Claimant is filing an initial claim for benefits after separating from his employment with Horsehead. Instead, this is the situation that calls for a determination of whether Claimant's acceptance of temporary or occasional work has disqualified him from continuing to receive UC benefits, an issue addressed by the parties but not in the Majority opinion. In this regard, our Court has consistently held that a claimant who is already receiving UC benefits is not customarily engaged in a trade or business by accepting an occasional assignment. See Minelli, 39 A.3d at 598 (claimant receiving UC benefits not disqualified by performing 22 hours of consulting work on an as-needed basis over a three-day period); Silver v. Unemployment Compensation Board of Review, 34 A.3d 893, 897-98 (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 course of five months).
In his request for reconsideration of the Board's Order, Claimant pointed out that he collected 33 weeks of UC benefits in 2012 and that, if he had not secured the temporary employment with Horsehead, he would have collected UC benefits for 43 weeks. (Request for Reconsideration, R. Item 14.) Claimant's Claim Record shows that when Claimant would secure occasional, casual employment he reported those earnings to the UC authorities and his weekly benefits were reduced accordingly. (Claim Record, R. Item 1.)
In this matter, the Board found that "[C]laimant agreed that he was customarily engaged in an independently established trade, occupation and profession as a CPA." (FOF ¶ 11.) The Board stated further that Claimant admitted that he had worked for others repeatedly for a number of years so that this instance of employment was not casual. (Board Op. at 4.) However, the Board's findings are not supported by the record. Claimant testified that it was agreed that his auditing services with Horsehead were short-term. (Hr'g Tr. at 6.) When asked whether Claimant owned his "own business as a CPA," he answered, "No, I do not." (Hr'g Tr. at 7.) Claimant explained that, over the last couple years, he has been trying to perform audit-type projects, like the one he performed for Horsehead, in hopes that he would be hired as a full-time employee. (Hr'g Tr. at 7.) Therefore, Claimant's testimony shows that he never stopped seeking full-time employment and only accepted sporadic short-term positions in the meantime.
See Production Plus, Inc. v. Unemployment Compensation Board of Review (Pa. Cmwlth., No. 873 C.D. 2012, filed December 7, 2012), slip op. at 8 (holding that the claimant was not customarily engaged in an independent trade or business where she "never stopped seeking full-time employment and only accepted the position with Employer to 'fill in' as she continued to look for a full-time position").
Moreover, the Board's reliance on the fact that Claimant is a licensed CPA as further support that Claimant was customarily engaged in an established business is insufficient. Pursuant to this Court's precedent, a claimant must actively participate in the operation of a private enterprise or perform a positive act to establish an independent business in order to be considered self-employed under Section 402(h) of the UC Law. Kirk v. Unemployment Compensation Board of Review, 425 A.2d 1188, 1190 (Pa. Cmwlth. 1981); Miller v. Unemployment Compensation Board of Review, 405 A.2d 1052, 1053 (Pa. Cmwlth. 1979). There is no evidence here that Claimant has taken the necessary steps or performed a positive act to establish an independent business such as advertising his services, renting office space, or purchasing equipment. To the contrary, the evidence shows and the Board found that "[C]laimant does not advertise or have business cards." (FOF ¶ 20.)
In Kirk, this Court concluded "that by submitting a bid to perform subcontracting jobs, negotiating a business loan and purchasing equipment for use in the business venture," the claimants had performed the necessary positive acts to be "considered to have embarked upon self-employment under Section 402(h) of the Law." Kirk, 425 A.2d at 1190 (footnotes omitted).
In Miller, this Court held that the placement of a magazine advertisement did not amount to the launching of a law practice because "it was only evidence of an intention to practice an intention [the claimant] shortly changed and did not represent the establishment of a professional enterprise." Miller, 405 A.2d at 1053. --------
The record in this case shows that after losing his job in 2010 and being entitled to UC benefits, Claimant has tried to find work, which has been temporary, short-term, and sporadic; thus, I believe this case is similar to Minelli and Silver. Accordingly, I would reverse the Board's Order.
/s/ _________
RENÉE COHN JUBELIRER, Judge