Opinion
Argued February 9, 1979
March 29, 1979.
Unemployment compensation — Self-employed businessman — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Corporate control — Estoppel — Employer contributions.
1. The president and minority stockholder of a corporation who was found to exercise control over corporate affairs to a substantial degree is properly held to be a self-employed businessman and ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897. [429-30]
2. The Unemployment Compensation Board of Review is not estopped to deny benefits to a self-employed businessman because his corporate employer paid unemployment insurance tax on his wages. as there exists no quid pro quo relationship between employer contributions and eligibility for benefits. [430-1]
Argued February 9, 1979, before Judges ROGERS, BLATT and DiSALLE, sitting as a panel of three.
Appeal, No. 2464 C.D. 1977, from the Order of the Unemployment Compensation Board of Review in case of In Re: Claim of Gerard L. Lafond, No. B-132148-B.
Application to the Bureau of Employment Security for unemployment compensation benefits. Application denied. Applicant appealed to the Unemployment Compensation Board of Review. Denial affirmed. Applicant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed.
Gerard L. Lafond, petitioner, for himself.
John Kupchinsky, Assistant Attorney General, with him Susan Shinkman, Assistant Attorney General, and Gerald Gornish, Attorney General, for respondent.
We must determine whether there exists in the record of this case substantial evidence to support the decision of the Unemployment Compensation Board of Review (Board) that Gerard L. Lafond (Claimant) is a self-employed businessman and, therefore, ineligible for benefits pursuant to Section 402(h) of the Unemployment Compensation Law, Act of December 5, 1936, P.L. (1937) 2897, as amended, 43 P. S. § 802(h).
Claimant was president and general manager of Versadyne, Incorporated, an engineering firm, and also owned 33 1/3% of the company's stock. It is his contention that notwithstanding his position and his stock holdings, the degree of control which he exercised over the business of the corporation was merely that which would be reposed in any professional employe: that is, to exercise independent judgment, to supervise a supportive staff, and, to control the work and production emanating from his office. A review of the record, however, convinces us that Claimant's duties and responsibilities were commensurate with the Board's finding that his control over the operation of the corporation was substantial enough to warrant the conclusion that he was a self-employed businessman. See Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972).
Claimant admitted at the hearing before the referee that following his election as president in December of 1973, he attempted to gain control of the affairs of the corporation. As general manager, his duties involved directing the day-to-day operations of the business. The fact that he was a minority stockholder does not vitiate his control over the corporation, since the test of control is not the quantum of stock ownership but the amount of actual control exercised. Berger v. Unemployment Compensation Board of Review, 17 Pa. Commw. 308, 331 A.2d 570 (1975). Finally, as a result of the financial difficulties facing the corporation, Claimant elected to forego receiving any salary from October, 1973, until May, 1974. In light of all these factors, we determine that the Board acted properly when it held Claimant to be ineligible for unemployment compensation benefits.
Claimant's second contention, that the Board should be estopped from denying benefits since the corporation had paid unemployment insurance tax on his wages, is equally without merit. In Bagley Huntsberger, Inc. v. Employer Accounts Review Board, Bureau of Employment Security, Department of Labor Industry, 34 Pa. Commw. 488, 383 A.2d 1299 (1978), we rejected the argument that there is a quid pro quo relationship between employer contributions based on the wages earned by shareholder-office-employes and their eligibility for benefits. The collection of unemployment tax from employers for employes who are stockholders and who have substantial control over the operation of the corporation was held not to be a denial of due process. See also Healey v. Unemployment Compensation Board of Review, 36 Pa. Commw. 415, 387 A.2d 1025 (1978). It follows, therefore, that the Board had the authority to deny Claimant benefits under the circumstances of this case.
Accordingly, we affirm.
PER CURIAM ORDER
AND NOW, this 29th day of March, 1979, the order of the Unemployment Compensation Board of Review, dated November 1, 1977, denying benefits to Gerard L. Lafond, is hereby affirmed.