Opinion
Argued September 25, 1978
October 25, 1978.
Unemployment compensation — Unemployed businessman — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Corporate control.
1. A claimant is properly found to be an unemployed businessman and ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897, when he becomes unemployed, when evidence establishes that his corporate employer is wholly owned by his spouse and that he exercised a substantial degree of control over the corporation. [270]
Argued September 25, 1978, before Judges CRUMLISH, JR., WILKINSON, JR. and MacPHAIL, sitting as a panel of three.
Appeal, No. 1920 C.D. 1977, from the Order of the Unemployment Compensation Board of Review in case of In Re: Appeal of James B. Finan, No. B-148564.
Unemployment compensation benefits denied by Bureau of Employment Security. Repayment of fault overpayment ordered. Claimant appealed to the Unemployment Compensation Board of Review. Appeal dismissed. Claimant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed.
John H. Klemeyer, with him Finan, Beecher, Wagner Rose, P.A., for appellant.
Charles G. Hasson, Assistant Attorney General, with him Robert P. Kane, Attorney General, for appellee.
This case comes before us on appeal following a decision of the Unemployment Compensation Board of Review dismissing claimant's appeal and affirming the referee's decision to deny benefits and require payment of a fault overpayment in the amount of $1,603. We affirm.
Claimant was last employed by Finan, Inc. as a general construction foreman in October 1976. Finan, Inc. is a family corporation, solely owned by claimant's wife who, in addition, was a full-time employee with another unrelated company. Claimant has worked as a mason for approximately 28 years. In his position as general foreman with Finan, Inc. he exercised control of on-site work details, made recommendations to his wife on hiring and firing, and generally controlled the day-to-day working operations of the corporation. On January 2, 1977 claimant filed for benefits after his separation from the corporation for the reason that no work was available.
Denial of benefits was made pursuant to Section 402(h) of the Unemployment Compensation Law, Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P. S. § 802(h), which provides in pertinent part:
An employe shall be ineligible for compensation for any week —
. . . .
(h) In which he is engaged in self-employment.
The issue is whether claimant ran the business. "[T]he proper test is whether the employee 'exercises a substantial degree of control over the corporation;' if so, he is a businessman and not an employee." Starinieri Unemployment Compensation Case, 447 Pa. 256, 260, 289 A.2d 726, 728 (1972). For an application of this test to facts closely analogous to those presented here, see Chaiken v. Unemployment Compensation Board of Review, 12 Pa. Commw. 534, 317 A.2d 345 (1974).
After closely scrutinizing the record before us we find sufficient evidence to support a finding that claimant exercised that degree of substantial control over the operations of the corporation which would negate the formal appearance of an employer-employee relationship between Finan, Inc. and claimant.
This claimant would be disqualified even under the standard proposed by Justice POMEROY in his dissent in Starinieri, supra, for here 100% voting control of the corporation is within the claimant's family, i.e., his wife.
Accordingly, we will enter the following
ORDER
AND NOW, October 25, 1978, the Order of the Unemployment Compensation Board of Review, Decision No. B-148564, dated August 12, 1977, denying benefits and imposing liability for fault overpayment to claimant is hereby affirmed.