Opinion
No. 1100 C.D. 2013
12-18-2014
Galina Volodina, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE McGINLEY
Galina Volodina (Claimant), pro se, petitions for review from an order of the Unemployment Compensation Board of Review (Board) that reversed the referee's decision granting Claimant unemployment compensation benefits. The Board concluded that Claimant was ineligible to receive unemployment benefits pursuant to Section 402(h) of the Unemployment Compensation Law (Law).
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h).
The Board made the following pertinent findings of fact:
1. The claimant performed patternmaking services as an independent contractor for Axiom Apparel Group, Inc. [AAG]. (Emphasis added.)Board's Decision, May 1, 2013, Findings of Fact Nos. 1-11 at 1-2. The Board concluded that "claimant was free from AAG's control or direction in performing her services" and that "the claimant was customarily engaged in an independently established trade." Board's Decision, Discussion at 2-3.
2. The claimant negotiated her pay based on the expected completion time at $60.00 per hour, from which no taxes were withheld and which was reported on a Form 1099. (Emphasis added.)
3. AAG did not train the claimant. (Emphasis added.)
4. The claimant worked from her home and selected her hours, based on deadlines established by AAG.
5. The claimant used her paper, pencils, and tools. (Emphasis added.)
6. The claimant invoiced AAG for completed work.
7. AAG reviewed the claimant's final pattern to assure it met specifications, but did not dictate how the claimant performed her work.
8. AAG permitted the claimant to perform patternmaking services for other entities. (Emphasis added.)
9. After the claimant ceased providing patternmaking services to AAG [Axiom], she entered a three-month contract to provide patternmaking services to Ashley Stewart. (Emphasis added.)
10. The claimant considers herself to be a professional patternmaker and technical designer. (Emphasis added.)
11. AAG was unable to participate in the initial hearing because the referee failed to call AAG's telephone number provided on its appeal from the Department of Labor and Industry determination.
Under Section 402(h) of the Law, 43 P.S. § 802(h), an employee is ineligible for unemployment compensation for any week in which she is engaged in self-employment. Section 402(h) of the Law does not define the term "self-employment," so courts look to the definition of employment provided by Section 4(l)(2)(B) of the Law, 43 P.S. § 753(l)(2)(B), which 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. (emphasis added).Both elements of Section 4(l)(2)(B) of the Law must be satisfied for a claimant to be self-employed. Silver v. Unemployment Compensation Board of Review, 34 A.3d 893 (Pa. Cmwlth. 2011).
Initially, Claimant contends that the Board erred when it concluded that Claimant was free from AAG's control and direction. Specifically, Claimant asserts that "AAG exerted the same level of control over my performance as any of my full-time employers did . . . when they [sic] needed to set up a meeting, I attended their [sic] meetings . . . the employer executed the maximum control it could possibly execute giving [sic] my qualifications . . . ." Brief for Petitioner at 15-16.
This Court's review in an unemployment compensation case is limited to a determination of whether constitutional rights were violated, errors of law were committed, or essential findings of fact were not supported by substantial evidence. Lee Hospital v. Unemployment Compensation Board of Review, 637 A.2d 695 (Pa. Cmwlth. 1994). The party asserting the self-employment bears the burden of proof. Roche v. Unemployment Compensation Board of Review, 503 A.2d 1103 (Pa. Cmwlth. 1986).
A number of factors are relevant in determining whether an individual is free of control. They include:
whether there is a fixed rate of remuneration; taxes are withheld from the [individual's] pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the [individual] was expected to attend.CE Credits OnLine v. Unemployment Compensation Board of Review, 946 A.2d 1162, 1168 (Pa. Cmwlth. 2008). "No one factor will control the outcome, but the courts will look to the entire relationship to determine whether the requisite control exists to establish an employer-employee relationship." Tracy v. Unemployment Compensation Board of Review, 23 A.2d 612, 616 (Pa. Cmwlth. 2011). (Emphasis added.)
Here, Richard A. Clapsaddle, CPA, (Clapsaddle), AAG's representative, testified that AAG did not provide equipment, tools, training or supervision to Claimant or formally evaluate her performance. See Board's Decision, F.F. No. 5. Clapsaddle testified that Claimant "stated what she wanted for each pattern, and according to Mr. [Frank] Letterman's [client] discussions with me he agreed to pay it . . . [s]o there were no negotiations, she stated what she wanted and that's what she was paid." R.H. at 8. No taxes were withheld from Claimant's wages, and Claimant received a 1099 form. Also, Claimant was free to perform services for others.
Referee directed the following questions to Clapsaddle.
Q: . . . Did AAG train the Claimant?Remand Hearing (R.H.), February 22, 2013, at 8-9.
A: No.
Q: . . . To what extent did AAG monitor the Claimant's work and review her performance?
A: The work was not monitored on any type of basis or daily basis. Of course when the final pattern was submitted it was reviewed to make sure it met specifications that were initially requested.
Q: . . . [B]ut was there consideration given to any other factors, such as timing, or clarity of the work, or anything else that might have been factored in and actually monitored by AAG?
A: No. As far as we were concerned the Claimant is an experienced patternmaker, so she was able to understand the instructions and the specifications given to fabricate the pattern and supply it. (emphasis added).
Where the Board's findings "are not challenged by [a claimant] . . . [those findings] . . . are therefore, binding upon this Court upon review." Salamak v. Unemployment Compensation Board of Review, 497 A.2d 951, 954 (Pa. Cmwlth. 1985).
Referee directed the following questions to Clapsaddle.
Q: . . . [D]id AAG allow the Claimant to concurrently provide patternmaking services for other entities?R.H. at 9.
A: Yes.
Q: . . .[I]s the Claimant physically capable of providing patternmaking services for other entities? And by that question I think the legal division is getting at, was there time allowed; was there exclusivity, anything else that would have prevented the Claimant, in a physical sense, from providing services to others?
A: No, there were no restrictions placed upon the Claimant. (emphasis added).
Q: . . . [B]efore, during or after providing patternmaking services for AAG, did the Claimant provide patternmaking services to other entities?
A: We know that she provided services before. As far as during and after . . . we're not privy to that information.
Basically, Claimant admitted that she was free to set her own rate of pay, that she was "using [her] own tools . . ." (R.H. at 10), that she was free to set her own hours and that she was free to perform identical services for others. Although Claimant did suggest that AAG had a more active role in her patternmaking, the Board found AAG only reviewed the final pattern, not how she performed her work. Board's Decision, F.F. No. 7.
Referee directed the following questions to Claimant.
Q: At no time did AAG say to you, you cannot do work for other companies on their patterns, you must work solely for us?R.H. at 11-12.
A: No.
. . . .
Q: . . . So was it possible that you could have worked for others in patternmaking? (emphasis added).
A: Yes. (emphasis added).
. . . .
Q: Okay. So you did, after finishing work for them, did you continue in the patternmaking work?
A: Yes.
Q: For other companies?
A: Yes . . . I just had this Ashley Stewart. (emphasis added).
Referee to Claimant:
Q: . . . And . . . to what extent did AAG monitor your work and review your performance?R.H. at 11.
A: They [sic] have to take my patterns and they [sic] have to make the samples, because all the production [was] done by Axiom Group [AAG], I'm just a little part of this production process. So for them to monitor my work they [sic] have to make a sample from day old fabric and they [sic] have to fit it on a fit model as I mentioned on a previous question.
Because the record supports the Board's determination that AAG did not exercise the requisite amount of control necessary to deem her an employee, this Court finds that the Board did not err when it found the first prong of the self-employment analysis was satisfied.
Claimant next contends that the Board erred when it concluded that she was customarily engaged in an independently established trade. Specifically, Claimant asserts that she did not take any "active steps" in establishing a business. Brief for Petitioner at 17.
The second prong of the self-employment test may be satisfied by showing that the claimant is customarily engaged in an independently established trade, occupation, profession or business. In Viktor, Ltd. v. Department of Labor and Industry, 892 A.2d 781, 794 (Pa. 2001), our Supreme Court held that the relevant word that courts must analyze with respect to determining whether the second prong is satisfied is "independent." Factors the Supreme Court considered were: the ability to work for more than one enterprise; the ability to refuse assignments; and the ability to perform services for anyone. Viktor, 892 A.2d at 795.
In Viktor, limousine drivers were called when work was available. The drivers provided services to the putative employers on a job-to-job basis, and did not have a continuing relationship after an assignment. Each assignment was taken or rejected strictly at each driver's prerogative. The Supreme Court found that the drivers were self-employed based on their ability to perform their services for more than one entity, including competitors, with no adverse consequences and the operation of their business was not dependent on the existence of the putative employers.
Specifically, our Supreme Court stated:
Evidence of record showed that the business of Drivers was not subject to the control of Appellees [the six limousine companies], was not a business unit or other component of the business of Appellees, and was not connected in a subordinate manner to any of Appellees companies. Appellees were clients of Drivers, but Drivers did not depend on Appellees for their existence, operation, or efficiency. If any one of the Appellees were to cease conducting business, or to decide not to contract with Drivers, Drivers would not be out of employment. Drivers were free to perform their services for any other limousine company and were not compelled to look to the existence of any one Appellee for continuation of their ability to provide driving services. (Citation omitted and emphasis added.)
Claimant argues that she was not "independent" but was dependent upon AAG. Claimant believes the present matter is comparable to Silver.
In Silver, Joan B. Silver (Silver) became unemployed in May of 2009. Silver posted her resume on line and held herself out to be an expert in the area of online mapping, GPS-based navigation systems and wireless devices. In early September 2009, Silver was contacted by Gerson Lehrman Group, Inc. (Gerson) and began to perform telephone consultations on an intermittent, as needed basis. On September 16, 2009, Silver reported the income she received to date from Gerson to the unemployment authorities. The local job center issued a determination that Silver was an independent contractor and was ineligible for benefits under 402(h) of the Law. Silver appealed.
At the hearing, Silver testified that as of December 2009, she had provided four telephone conversations and completed one survey at an hourly rate of $375.00 during a three-month period from September 2009 to December 2009. Silver, 34 A.3d at 895. She testified that her last assignment was in October 2009. Based on Silver's testimony, the referee found that she was not ineligible for benefits. Gerson appealed. The Board remanded for another hearing because Gerson did not receive notice of the first proceeding. After the hearing, the Board found that Gerson demonstrated that Silver was engaged in an independent trade or business.
On appeal, this Court held that "after careful review, we conclude that the record demonstrates that [Silver] was free from Gerson's control in the performance of her telephone consultations, but . . . the record does not demonstrate that [Silver] was customarily engaged in an independently established trade or business." Silver, 34 A.3d at 899.
This Court's decision in no way is intended to deviate from the holding in Silver. However, each case must be decided on the basis of the record and the unique circumstances of each claimant, which may differ from one case to another. Unfortunately for Claimant, the only facts of record support that Claimant was an independent contractor and not employed by AAG.
Here, Claimant presented herself as a professional patternmaker and technical designer. Board's F.F. No. 10. Claimant stated "I am a professional Technical Designer/Patternmaker . . . [t]his is my profession and I've been doing this my whole life." Claimant's Additional Information at 2; Certified Record (C.R.), R. Item No. 9. Additionally, Claimant testified that "I just had a contract for three months with Ashley Stewart" (R.H. at 14) which she referred to as a "freelance job." Brief for Petitioner at 12.
In unemployment compensation proceedings, the Board is the ultimate fact-finding body empowered to resolve conflicts in evidence, to determine the credibility of witnesses, and to determine the weight to be accorded evidence. Unemployment Compensation Board of Review v. Wright, 347 A.2d 328 (Pa. Cmwlth. 1975). Substantial evidence is relevant evidence that a reasonable mind might consider adequate to support a conclusion. Hercules, Inc. v. Unemployment Compensation Board of Review, 604 A.2d 1159 (Pa. Cmwlth. 1992).
To determine whether a claimant is customarily engaged in an independently established trade, occupation, profession, or business while working, the Board must balance the following factors: (1) whether the claimant may perform services for more than one entity, including competitors, without adverse consequences; (2) whether the operation of the claimant's business and her ability to perform work depended on the existence of the purported employer; and (3) whether the claimant possessed the requisite interest and tools of her trade necessary to conduct her business, regardless of absolute proprietary interest.
Here, the claimant received a Form 1099 and considered herself to be a professional pattern maker and technical designer operating as an independent contractor. The claimant was permitted to perform patternmaking services for an entity and had the skills and tools to perform these services for other entities. Finally, after her services for AAG concluded, she entered a three-month contract to perform patternmaking services for Ashley Stewart.
Based on the entire record, the Board concludes that the claimant was customarily engaged in an independently established trade. Therefore, the claimant was self-
employed and benefits must be denied. (Emphasis added.)Board's Decision, Discussion at 2-3.
Based on the undisputed facts of the record, this Court agrees with the Board that AAG sustained its burden that Claimant was self-employed.
Claimant also argued: "Did the Unemployment Compensation Board of Review failed [sic] to take into account a sideline activity exception and four prongs that are specified in Kress v. Unemployment Compensation Board of Review, 23 A.3d 362 (Pa. Cmwlth. 2011) . . . ." "[W]here a Claimant fails to include an issue in his petition for review, but addresses the issue in his brief, this court has declined to consider the issue, since it was not raised in the stated objections in the petition for review, nor 'fairly comprised therein' in accordance with Pa. R.A.P. 1513(a)." Jimoh v. Unemployment Compensation Board of Review, 902 A.2d 608, 611 (Pa. Cmwlth. 2006), quoting Tyler v. Unemployment Compensation Board of Review, 591 A.2d 1164, 1168 (Pa. Cmwlth. 1991).
Accordingly, this Court affirms.
/s/_________
BERNARD L. McGINLEY, Judge ORDER
AND NOW, this 18th day of December, 2014, the order of the Unemployment Compensation Board of Review in the above-captioned matter is affirmed.
/s/_________
BERNARD L. McGINLEY, Judge BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge OPINION NOT REPORTED DISSENTING OPINION BY JUDGE McCULLOUGH
Respectfully, I dissent. The Unemployment Compensation Board of Review (Board) has determined that a claimant is self-employed for purposes of section 402(h) of the Unemployment Compensation Law (Law), but without acknowledging all of the essential facts, recognizing that the Bureau bore the burden of proof, or considering that the acceptance of work as an independent contractor does not compel the conclusion that a claimant is self-employed. Accordingly, I would vacate the Board's order and remand this matter for consideration under this Court's decision in Silver v. Unemployment Compensation Board of Review, 34 A.3d 893 (Pa. Cmwlth. 2011).
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h).
In determining whether an individual is ineligible for benefits under section 402(h) of the Law on the basis of self-employment, we apply the two-part test for employment contained in section 4(l)(2)(B) of the Law, 43 P.S. §753(l)(2)(B), and inquire whether: (1) the individual is free from direction and control over the performance of his services; and (2) the individual is customarily engaged in an independently established trade, occupation, profession, or business. This Court has consistently held that, before a claimant will be declared to be self-employed, both elements of section 4(l)(2)(B) must be satisfied. Buchanan v. Unemployment Compensation Board of Review, 581 A.2d 1005 (Pa. Cmwlth. 1990). Normally the employer has the burden of proving that a claimant is self-employed. Teets v. Unemployment Compensation Board of Review, 615 A.2d 987 (Pa. Cmwlth. 1992). However, we have long held that where, as here, the Bureau initiates proceedings that result in a suspension of benefits because of self-employment, the Bureau carries the burden of proof. Id. --------
When Galina Volodina (Claimant) was told that her full-time employment as a pattern-maker was ending, she began performing pattern-making services on a part-time basis for Axiom Apparel Group, Inc. (AAG). Following her separation from full-time employment, Claimant was eligible for unemployment benefits. Claimant was advised, correctly, that she was allowed to work part-time while receiving benefits and that she was required to report any income earned. When Claimant reported her earnings from part-time work with AAG, the Bureau contacted that company, which contested its status as Claimant's separating employer.
The local service center determined that Claimant was not ineligible for benefits under section 402(h) of the Law. AAG appealed to a referee, but did not attend the first hearing. The referee affirmed the job center's determination, but the Board remanded for additional hearings to address the reasons for AAG's non-appearance. Following remand hearings, the Board reversed the referee's determination and concluded that Claimant was self-employed and thus ineligible for benefits under section 402(h) of the Law.
I would emphasize that where, as here, a claimant is already receiving benefits, the question presented is not whether the work at issue would entitle the claimant to benefits, but rather whether it disqualifies the claimant from receiving future compensation. Minelli v. Unemployment Compensation Board of Review, 39 A.3d 593 (Pa. Cmwlth. 2012). Here, however, the Board began its analysis of eligibility under section 402(h) by examining Claimant's current, ongoing relationship with a new entity, AAG. The Board then framed the issue presented as whether Claimant's work as an independent contractor establishes that AAG is Claimant's employer or that Claimant has become self-employed, thereby engaging in an either/or analysis that is simply unworkable under these factual circumstances. Silver. Although the Majority purports to distinguish that line of cases, the Majority nevertheless applies the same analysis, limiting its review to those two alternative conclusions.
In determining that Claimant is self-employed, the Majority relies on our Supreme Court's analysis in Viktor, Ltd. v. Department of Labor and Industry, 892 A.2d 781 (Pa. 2001), which, in deciding the second prong of the self-employment test (that is, whether the claimant is customarily engaged in an independently established trade, occupation, profession, or business), emphasized the word independent. However, the dispute in Viktor was critically distinguishable from the issue before this Court now: whereas the question in Viktor was whether limousine drivers were employees of the putative employer or were independent contractors, the question here is whether Claimant's work as an independent contractor for AAG is sufficient to establish that she is customarily engaged in an established trade, occupation, profession, or business.
In Jia v. Unemployment Compensation Board of Review, 55 A.3d 545 (Pa. Cmwlth. 2012), we held that evidence that a claimant is customarily engaged in an independently established trade or business is an absolute prerequisite to a determination that a claimant is ineligible for compensation based on his self-employment under section 402(h) of the Law. The analysis in Jia is equally applicable here, and in every other case where the status of the putative employer is, arguably, immaterial.
As in Silver, the determination in this case requires, preliminarily, acknowledgment that an employee can be eligible for unemployment compensation following a valid separation and not necessarily be rendered ineligible for benefits based on income subsequently earned as an independent contractor. "Obviously an unemployed individual can accept occasional assignments without being 'customarily engaged in an independently established trade, occupation, profession or business.'" Id. at 896 n.7. In other words, a finding that Claimant was an independent contractor for AAG does not compel the conclusion that Claimant is self-employed for purposes of eligibility under section 402(h) of the Law.
The evidence cited by the Majority and upon which the Board relied supports a determination that Claimant was an independent contractor, but, when viewed under the appropriate analysis, may fall short of that necessary to satisfy the second prong of that test. See, e.g., Minelli (evidence that the claimant performed work on an as-needed basis was insufficient to demonstrate that the claimant was customarily engaged in an established trade, occupation, or business); Silver (same; the claimant's relationship was ongoing, and the either/or analysis was not properly applied); Kirk v. Unemployment Compensation Board of Review, 425 A.2d 1188 (Pa. Cmwlth. 1981) (a claimant embarks upon self-employment under section 402(h) when he performs a positive act of establishing an independent business enterprise); Miller v. Unemployment Compensation Board of Review, 405 A.2d 1052 (Pa. Cmwlth. 1979) (a claimant is generally considered to embark upon self-employment only where he actively participates in the operation of a private enterprise or performs a positive act to establish an independent business). Indeed, in Minelli we emphasized that "the Law requires [proof] that the claimant be customarily engaged in such trade or business in order to be considered self-employed." 39 A.3d at 598 (emphasis in original).
I submit that there are many types of work where the skills, tools, and duties involved do not change or depend on whether an individual is employed by another or self-employed. Indeed, countless professions and occupations are pursued in the same manner within the context of different legal relationships. For example, whether an accountant, barber, bodyguard, carpenter, chef, court reporter, dietician, engineer, florist, hairdresser, home inspector, IT specialist, lawyer, mechanic, photographer, pilot, reporter, or tailor has an employer or is self-employed could not be easily ascertained merely by observing the performance or supervision of their daily duties.
In this case, Claimant testified that she is a professional technical design/pattern-maker and has been doing the same work all of her life. Importantly, the Bureau offered no evidence that Claimant's duties or the performance of her duties for AAG varied at all or differed in any way from the performance of her permanent, full-time employment position on which her eligibility for benefits was based. Thus, the evidence upon which the Board relied does not satisfy the Bureau's burden to establish that Claimant actively participated in the operation of a private enterprise or performed a positive act to establish an independent business. Kirk; Miller.
I find it troubling that the Board makes no reference to Claimant's argument and evidence concerning her separation from prior, full-time employment or her ongoing (and ultimately successful) search for another full-time job. The Board's overlooking such information and its failure to require the Bureau to prove a claimant's "independently established trade or business" merits the Court's attention. Further, the Board's application of the either/or analysis to circumstances where, as here, a claimant establishes eligibility for benefits, reports income earned as an independent contractor, and then has to prove an employment relationship whose existence only the Bureau has asserted, is patently contrary to the Law's humanitarian purpose.
Accordingly, I would vacate the Board's order and remand to the Board to reconsider the record and issue a new decision consistent with our holdings in Minelli, Silver, Kirk, and Miller.
/s/_________
PATRICIA A. McCULLOUGH, Judge
Viktor, 892 A.2d at 795.