Opinion
No. 1364 C.D. 2012
07-30-2013
Principle Diversified Business Group, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE LEAVITT
Principle Diversified Business Group (Employer) petitions for review of an adjudication of the Unemployment Compensation Board of Review (Board) awarding unemployment compensation benefits to Marissa D. Brainard (Claimant). In doing so, the Board determined that Claimant was not self-employed and, therefore, not disqualified from receiving benefits under Section 402(h) of the Unemployment Compensation Law (Law). We reverse.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h).
Claimant worked for Employer as a part-time home typist, beginning on January 19, 2012. She transcribed audio files, earning 60 cents per page. Claimant resigned on February 10, 2012, and applied for unemployment benefits. The Altoona UC Service Center granted benefits after concluding that Claimant was not self-employed. Employer appealed and a hearing was held by the Referee.
Claimant received two Notices of Determination, both issued on the same day. One notice determined that Claimant was eligible for benefits under Section 402(h) and the other found her partially ineligible under Section 402(b), 43 P.S. §802(b), for the amount of her part-time earnings. The partial ineligibility determination is not at issue in this appeal.
Employer, represented by legal counsel, offered the testimony of its assistant office manager, Tracey Johns. Johns testified that Claimant signed Employer's standard independent contractor agreement, which defined the parameters of the relationship between Employer and Claimant and stated that Claimant was an independent contractor. Employer did not provide Claimant with any equipment, tools or materials. Claimant was free to accept or reject any assignments and was free to set her own hours. The only requirement Employer placed upon Claimant was a completion date for each assignment that she accepted.
Claimant, appearing pro se, testified on her own behalf. Claimant agreed with the testimony presented by Employer. Claimant added that she used all of her own equipment and that she accepted the position because she was told by someone at the Altoona UC Service Center that she would not be considered an independent contractor. Notes of Testimony, April 13, 2012 at 6 (N.T. ___). Claimant was asked by the Referee whether she performed typing services for any other entities. Claimant's response, as transcribed, was "Um-um." N.T. 6. It is unclear what Claimant meant by that response.
The Referee granted benefits, concluding that Employer failed to meet its burden of proving that Claimant was engaged in self-employment. The Referee made the factual determination that Claimant did not perform typing services for any other entity. Referee's Decision at 1; Finding of Fact 8. The Board affirmed on the basis of the Referee's factual findings and legal conclusions. Specifically, the Board concluded that Claimant was not customarily engaged in an independently established trade by virtue of the "sporadic typing work" she performed. Board Opinion at 1. Employer now petitions for this Court's review.
On appeal, Employer argues that the Board's determination that Claimant was an employee is not supported by substantial evidence. Specifically, Employer argues that because Claimant was free of Employer's control, Claimant cannot be considered to have been an employee.
Our scope of review is limited to determining whether the Board's adjudication is in violation of constitutional rights, errors of law were committed, or whether findings of fact are supported by substantial evidence. Kirkwood v. Unemployment Compensation Board of Review, 525 A.2d 841, 843 (Pa. Cmwlth. 1987).
Employer also argues that Claimant failed to prove her voluntary termination was for "good reason" under Section 402(b) of the Law. Employer's Brief at 12. However, as noted in footnote 2 of this opinion, a separate Notice of Determination issued by the Altoona UC Service Center found Claimant partially ineligible for benefits under Section 402(b). That Notice of Determination is not the subject of this appeal and, therefore, we will not consider this argument.
We begin with a review of the relevant law. Section 401 of the Law states, in relevant part, that "[c]ompensation shall be payable to any employe who is or becomes unemployed...." 43 P.S. §801. Section 402(h) provides that a claimant shall be ineligible for benefits in any week in which she is engaged in self-employment.
Section 402(h) states, in relevant part, as follows:
An employe shall be ineligible for compensation for any week -
* * *
(h) In which he is engaged in self-employment: Provided, however, that an employe who is able and available for full-time work shall be deemed not engaged in self-employment by reason of continued participation without substantial change during a period of unemployment in any activity including farming operations undertaken while customarily employed by an employer in full-time work whether or not such work is in "employment" as defined in this act and continued subsequent to separation from such work when such activity is not engaged in as a primary source of livelihood. Net earnings received by the employe with respect to such activity shall be deemed remuneration paid or payable with respect to such period as shall be determined by rules and regulations of the department.
Though self-employment is not defined by the Law, the legislature has established a two-pronged test for determining whether a claimant is in an employment relationship. 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 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). This provision has been construed to mean that a person paid a wage is presumed to be "an employee, as opposed to an independent contractor." Osborne Associates, Inc. v. Unemployment Compensation Board of Review, 3 A.3d 722, 728 (Pa. Cmwlth. 2010). However, the putative employer may overcome this presumption by showing "that the claimant: (1) 'was free from control and direction in the performance of his service'; and (2) 'as to such service, was customarily engaged in an independent trade or business.'" Id. (citation omitted).
As to the first prong, when determining whether a putative employer has the requisite control, courts consider factors such as:
whether there was a fixed rate of remuneration; whether taxes were withheld from the claimant's pay; whether the employer supplied the tools necessary to carry out the services; whether the employer provided on-the-job training; whether the employer set the time and location for work; whether the employer had the right to monitor the claimant's work and review performance; and whether the employer held regular meetings that the claimant was expected to attend.Resource Staffing, Inc. v. Unemployment Compensation Board of Review, 995 A.2d 887, 890 n.6 (Pa. Cmwlth. 2010) (citing CE Credits OnLine v. Unemployment Compensation Board of Review, 946 A.2d 1162, 1168 (Pa. Cmwlth. 2008)). Because "each case is fact specific, all of these factors need not be present to determine the type of relationship which exists," and no single factor is dispositive of the ultimate question of whether the putative employer controls the work to be done and the manner in which it is done. York Newspaper Co. v. Unemployment Compensation Board of Review, 635 A.2d 251, 253 (Pa. Cmwlth. 1993). If the alleged employer has the "right to control the work to be done and the manner in which it was performed," this suggests an employer-employee relationship. Kurbatov v. Department of Labor and Industry, Office of Unemployment Compensation, Tax Services, 29 A.3d 66, 70 (Pa. Cmwlth. 2011) (emphasis omitted) (quotation omitted).
Critically, however, there is a difference between control of a work product and control over the time, place, and manner of performance. The former suggests an independent contractor relationship, and the latter suggests an employment relationship. CE Credits OnLine, 946 A.2d at 1169. As we explained in CE Credits OnLine:
"Control of the result only and not of the means of accomplishment" [does] not transform an independent contractor relationship into an employer-employee relationship. Every job, whether performed by an employee or by an independent contractor, has parameters and expectations. "Control" for purposes of Section 4(l)(2)(B) of the Law is not a matter of approving or directing the final work product so much as it is a matter of controlling the means of its accomplishment.Id. (footnotes omitted) (citation omitted).
Here, Claimant was generally free from Employer's control and direction in the performance of her typing services. Claimant's pay was based on how many pages she typed; not an hourly rate or a base salary. Claimant supplied all of the tools necessary for performing her work. Claimant was not trained by Employer. Employer did not control the time, place or manner of Claimant's performance. Employer merely offered assignments to Claimant, which Claimant was free to accept or reject. Although Employer set deadlines for Claimant's assignments, that factor alone is insufficient to support a finding that Claimant was subject to Employer's control.
Turning to the second prong of the self-employment test, when determining whether a claimant was engaged in an independently established trade, occupation, profession or business, courts generally consider: (1) whether the individual was "'capable of performing [her services for] anyone who wished to avail themselves of the services' and [was] not 'compelled ... to look to only a single employer for the continuation of such services'"; (2) whether the individual was "dependent on [the presumed employer] for employment"; and (3) whether the individual was "hired on a job-to-job basis and could refuse any assignment." Osborne, 3 A.3d at 728 (citations omitted).
Applying the above factors in the present case, we hold that Claimant was engaged in an independent trade. Claimant was not compelled to look to a single employer and was free to perform typing services for anyone she chose. The Board found that Claimant did not in fact perform services for anyone other than Employer; however, as this Court noted in Kelly v. Unemployment Compensation Board of Review, 528 A.2d 294, 295 (Pa. Cmwlth. 1987), a claimant's status as an independent contractor is not negated by the mere fact that an employer was the only entity for which the claimant actually performed services. Further, Claimant was hired and paid on a job-to-job basis and was free to accept as many or as few assignments as she chose. Based upon the foregoing evidence, we hold that Claimant was engaged in an independently established trade and the Board erred in determining that she was not an independent contractor under Section 402(h) of the Law.
Accordingly, the order of the Board is reversed.
/s/_________
MARY HANNAH LEAVITT, Judge ORDER
AND NOW, this 30th day of July, 2013, the order of the Unemployment Compensation Board of Review dated June 18, 2012, in the above-captioned matter is hereby REVERSED.
/s/_________
MARY HANNAH LEAVITT, Judge
43 P.S. §802(h).