Summary
In Haines, a case also involving Staffmore, the claimant worked approximately thirty-four hours per week as a TSS. The UCBR affirmed the Referee's denial of benefits concluding that the claimant was an independent contractor.
Summary of this case from Staffmore, LLC v. Unemployment Compensation Board of ReviewOpinion
No. 2522 C.D. 2011
12-05-2012
Susan J. Haines, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COVEY
Susan J. Haines (Claimant) petitions this Court, pro se, for review of the Unemployment Compensation Board of Review's (UCBR) December 2, 2011 order affirming the Referee's decision denying her unemployment compensation (UC) benefits. There is essentially one issue before the Court: whether Claimant was an independent contractor and, thus, ineligible for benefits under the Unemployment Compensation Law (Law). We reverse.
Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. §§ 751-914.
Claimant worked as a part-time Therapeutic Support Staff (TSS) person with Staffmore, LLC (Staffmore) approximately thirty-four hours per week, from July 2009 until May 31, 2011, at the rate of $15.00 per hour. Staffmore is a staffing agency that provides TSS to various client agencies. On May 31, 2011, Staffmore notified Claimant that the client agency for which she had been working requested that Claimant stop providing service due to Claimant's "inconsistency in service."
Staffmore intervenes in this appeal pursuant to Pa.R.A.P. 1531(a).
On June 12, 2011, Claimant filed an application for unemployment compensation. Although Staffmore asserted that Claimant was an independent contractor, on July 19, 2011, the Altoona UC Service Center issued a determination awarding benefits, concluding that Claimant was not free from Staffmore's direction and control. Staffmore appealed the determination and, on August 26, 2011, a hearing was held before a Referee at which both Claimant and Megan Tobin (Tobin), Staffmore's Assistant Director, testified. On September 28, 2011, the Referee reversed the UC Service Center's determination, and found Claimant ineligible for benefits because she was self-employed. Claimant appealed to the UCBR which, on December 2, 2011, affirmed the Referee's decision. Claimant appealed to this Court.
This Court's review is limited to determining whether the findings of fact were supported by substantial evidence, whether constitutional rights were violated, or whether errors of law were committed. Johnson v. Unemployment Comp. Bd. of Review, 869 A.2d 1095 (Pa. Cmwlth. 2005).
Claimant contends that the UCBR erred when it determined that she was an independent contractor, and thus, was not Staffmore's employee. We agree.
In Hartman v. Unemployment Compensation Board of Review, 39 A.3d 507 (Pa. Cmwlth. 2012), this Court described the analysis used to determine whether a claimant is an employee or is self-employed:
Section 402(h) of the Law, 43 P.S. § 802(h), provides that . . . persons are ineligible for unemployment compensation for any week in which they are engaged in self-employment. The term 'self-employment' is not defined in the Law. However, the courts have consistently found that independent contractors are to be considered 'self-employed.'
Section 4(l)(2)(B) of the Law creates the following two-pronged test to be used in determining whether a person is a
self-employed independent contractor or an employee. Specifically, this section provides that:
Services performed by an individual for wages shall be deemed to be employment subject to [the Law], 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.
Id. at 511 (citations omitted, emphasis added).
43 P.S. § 753(l)(2)(B).
It is presumed that a person is an employee rather than an independent contractor.
To overcome this statutory presumption of employment, the employer must show that the individual performed the work free from the employer's control and direction and that the work was done for others, not just the employer. Unless both of these showings are made, it will be presumed that one who performs services for wages is an employee.Sharp Equipment Co. v. Unemployment Comp. Bd. of Review, 808 A.2d 1019, 1023 (Pa. Cmwlth. 2002) (emphasis added). Whether a claimant is an employee or an independent contractor is a legal determination. Hartman.
As to the first prong of the test, the UCBR determined that Staffmore did not direct and control Claimant's work. We agree. This Court has previously considered whether an employment agency was an employer for purposes of a UC claim. In Resource Staffing, Inc. v. Unemployment Compensation Board of Review, 995 A.2d 887 (Pa. Cmwlth. 2010), this Court stated:
In analyzing the issue of 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. No one factor is dispositive; instead this Court looks to the totality of the circumstances.Id. at 890 n.6 (citations omitted).
In the instant matter, the UCBR found that Claimant was free from Staffmore's direction and control. The UCBR based that conclusion upon facts which were supported by Tobin's testimony that Claimant was free to accept or reject Staffmore's work offers; that Staffmore did not exercise direction or control over the manner in which Claimant performed her work; and that Claimant's work performance was supervised by the client agency.
[I]t is well settled that the [UCBR] is the ultimate finder of fact in unemployment compensation proceedings. Thus, issues of credibility are for the [UCBR] which may either accept or reject a witness' testimony whether or not it is corroborated by other evidence of record. Findings of fact are conclusive upon review provided that the record, taken as a whole, contains substantial evidence to support the findings.Chapman v. Unemployment Comp. Bd. of Review, 20 A.3d 603, 607 (Pa. Cmwlth. 2011) (citations omitted). Because the factual findings upon which the legal determination as to the control and direction of Claimant's work were based upon witness testimony, we find that the UCBR's factual findings are supported by substantial evidence.
We next consider the second prong of the test, whether "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) (emphasis added). This Court has considered two factors relevant in making such a determination: "(1) whether the individual was capable of performing the activities in question for anyone who wished to avail themselves of the services; and (2) whether the nature of the business compelled the individual to look to only a single employer for the continuation of such services." Beacon Flag Car Co., Inc. v. Unemployment Comp. Bd. of Review, 910 A.2d 103, 108-09 (Pa. Cmwlth. 2006) (citations omitted). The UCBR concluded that Claimant met the second prong of the test. We disagree.
The General Assembly, in Section 3 of the Law, unambiguously declared that:
the public good and the general welfare of the citizens of this Commonwealth require the exercise of the police powers of the Commonwealth in the enactment of this act for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.43 P.S. § 752. See also Harkness v. Unemployment Comp. Bd. of Review, 591 Pa. 543, 920 A.2d 162 (2007). In furtherance of that purpose, the Pennsylvania Supreme Court has held:
[T]he provisions of the Unemployment Compensation Law must be liberally construed to provide the broadest possible benefits to those who experienced forced unemployment. As this Court stated in Penn Hills School District v. Unemployment Compensation Board of Review, 496 Pa. 620, 625, 437 A.2d 1213, 1215 (1981), 'Mindful of this remedial, humanitarian objective, the courts have always interpreted the benefits sections liberally and broadly to alleviate the distress of the involuntarily unemployed.'Renne v. Unemployment Comp. Bd. of Review, 499 Pa. 299, 305 n.4, 453 A.2d 318, 321 n.4 (1982). The Court has also stated:
Having in mind the broad purposes of this unemployment compensation legislation as expressed in the preamble to the act, it is our opinion that it was the intention of the legislature to provide for a larger coverage of employes entitled to unemployment compensation than merely those
who would be considered employes under the common law, and to include, as it expressly states, 'all services performed for remuneration', subject only to the exceptions specified in other provisions of the act hereinafter referred to.Dep't of Labor and Indus. v. Aluminum Cooking Utensil Co., 368 Pa. 276, 280, 82 A.2d 897, 898-99 (1951).
"[A] determination regarding the existence of an employer/employee relationship is a question of law that is determined on the unique facts of each case." Danielle Viktor, Ltd. v. Department of Labor and Industry, Bureau of Employer Tax Operations, 586 Pa. 196, 212, 892 A.2d 781, 791 (2006) (quoting Universal Am-Can, Ltd. v. Workers' Comp. Appeal Bd. (Minteer), 563 Pa. 480, 486, 762 A.2d 328, 330-31 (2000)) (emphasis added). Importantly, "a worker can be considered an independent contractor only if he or she is in business for himself or herself." Id. at 223, 892 A.2d at 798 (2006) (emphasis added). We are obligated by the Law to examine "such individual['s]" unique set of circumstances. 43 P.S. § 753(l)(2)(B). The proper approach is to focus the inquiry on the conduct of the individual claimant. Thus, the appropriate inquiry is whether the claimant, was, in fact, customarily engaged in a trade, occupation, profession or business that was independently established. See, e.g., Glatfelter Barber Shop v. Unemployment Comp. Bd. of Review, 957 A.2d 786 (Pa. Cmwlth. 2008).
The recent case of Peidong Jia v. Unemployment Compensation Board of Review, ___ A.3d ___ (Pa. Cmwlth. No. 2459 C.D. 2011, filed September 7, 2012), is instructive. There, the claimant was engaged as a programmer with Quality Data Services through a consultant agreement, until such time as his services were no longer needed. Claimant filed for UC benefits. The UCBR concluded that the claimant was an independent contractor and the claimant appealed to this Court. In reversing the UCBR, this Court found that Quality Data Services failed to meet its burden of establishing that the claimant was customarily engaged in an independent trade, occupation, profession or business under the second prong. The Court stated:
the record here lacks any evidence that Claimant customarily engaged in an independent business or performed programming services for any other business. . . . Claimant's testimony is clear that he was not so engaged, and there is no contrary evidence. The single act of signing the consulting contract here does not suffice. The contract language providing that Claimant could work for others does not establish that he engaged in an independent business, and did work for others. Moreover, the scope of work requires Claimant to work in Employer's offices during specified business hours, thus undermining his ability to work for others. The test an employer must satisfy to overcome the presumption of an employment relationship is simply not met here.Peidong Jia, ___ A.3d at ___, slip op. at 8 (citations omitted).
Similarly, we conclude that Staffmore has not met its burden. When considered in the context of the two previously-stated factors, we find that Claimant was not a self-employed independent contractor. As to the first factor, at the time Claimant began working with Staffmore, she was not "capable of performing the activities in question for anyone who wished to avail themselves of the services." Beacon Flag, 910 A.2d at 108-09. Claimant was not certified or even trained to perform the TSS work until she began working for Staffmore, at which time Staffmore trained her, and procured certifications on her behalf. Thus, based on the record Claimant trained and received certifications in order to work for Staffmore, not to "independently establish[ ] [a] trade . . . or business." 43 P.S. § 753(l)(2)(B). We further conclude that "the nature of the business compelled [Claimant] to look to only a single employer for the continuation of such services." Beacon Flag, 910 A.2d at 108-09. Although Staffmore testified that Claimant was permitted to work for other companies, doing so was not an option for Claimant because her working hours with Staffmore provided her little time to perform TSS services elsewhere. See Sharp; see also Peidong Jia; Glatfelter Barber Shop. The UCBR found that Claimant worked approximately thirty-four hours per week. Accordingly, as a practical matter, Claimant had no time to contract with other agencies.
Claimant and Tobin testified that although Staffmore obtained the necessary certifications on Claimant's behalf, the applicable fees for those certifications were deducted from Claimant's paychecks.
Further, there is no evidence that Claimant ever held herself out as available for employment by anyone other than Staffmore. As this Court stated in Applied Measurement Professionals, Inc. v. Unemployment Compensation Board of Review, 844 A.2d 632, 636 (Pa. Cmwlth. 2004), "whether the individual held himself out or was capable of performing the particular activities in question for anyone who wished to avail himself of such services and whether the nature of the business compelled the individual to look to only a single employer for the continuation of such services" are factors the Court must evaluate when determining whether a putative employer has proven that an individual is an independent contractor. Simply put, Staffmore had the burden of proof and the record does not demonstrate that Claimant was customarily engaged in an independently established trade or business. Beacon Flag; see also Peidong Jia. Accordingly, we conclude the UCBR erred when it determined that Claimant was a self-employed independent contractor under Section 4(l)(2)(B) of the Law.
Although the record does reveal that Employer did not deduct taxes from Claimant's pay and issued her a 1099 form at year's end, and that Claimant signed an independent contractor agreement, we conclude that substance must govern over form. This Court has held that although the existence of an independent contractor agreement is significant, it is not dispositive. Stage Rd. Poultry Catchers v. Dep't. of Labor and Industry, 34 A.3d 876 (Pa. Cmwlth. 2011) .
Attached to Claimant's Brief is a copy of an IRS document dated March 29, 2012, entitled, "Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding" (Determination). The Determination states that it was issued in response to a request for a determination of employment status, for federal employment tax purposes, concerning the work relationship between Staffmore and Claimant. The Determination concluded that Claimant was a Staffmore employee. Claimant asserts that the Determination is proof that she was Staffmore's employee and is thus entitled to benefits. We disagree. The Determination is not part of the record, as it was issued approximately four months after the UCBR rendered its decision. Further, the Determination clearly states that it is a determination for federal employment tax purposes. Determination at 1. Finally, the Determination states, "[t]his determination is based on the application of law to the information presented to us and/or discovered by us during the course of our investigation; however, we are not in a position to personally judge the validity of the information submitted." Determination at 5 (emphasis added). Thus, we conclude that the Determination has no bearing on the outcome of this matter. --------
For the above-stated reasons, the UCBR's order is reversed.
/s/_________
ANNE E. COVEY, Judge
ORDER
AND NOW, this 5th day of December, 2012, the Unemployment Compensation Board of Review's December 2, 2011 order is reversed.
/s/_________
ANNE E. COVEY, Judge