Tuesday, January 30, 2007

UC- employee v. independent contractor

Beacon Flag Car Co. v. UCBR - 910 A.2d 103 (Pa. Cmwlth. 2006)

http://www.courts.state.pa.us/OpPosting/CWealth/out/928CD06_10-31-06.pdf

Claimant held to be a self-employed independent contractor rather than an employee and thus not eligible for UC benefits.

The Claimant -- who did not appear at or participate in the referee hearing -- provided flag car services to clients of Beacon Flag Co. (BFC) under an "independent contractor agreement." A flag car (aka pilot or escort car) accompanies oversized loads on trips. Drivers such as claimant are free to accept or decline any offered trip from BFC and are encouraged to promote their own business. Some drivers have their own vehicles; some rent them from the a business owned by the ER's husband. The drivers get no training. They are given 1099 income tax forms rather than W-2 forms.

The UCBR determined that claimant and others were under BFC's direction or control. The court reversed, based on the decision in Viktor, Ltd. v. Dept. of Labor and Industry, 892 A.2d 781 (Pa. 2006), which decision "was ignored by both the referee and UCBR."

The courts refer to sec. 4(el)(2)(B) of the UC Law, 43 P.S. sec. 753 (el)(2)(B) in these cases. That provision "presumes that an individual is an employee, as opposed to an independent contractor, but this presumption may be overcome if the putative employer sustains its burden of showing that the claimant was free from the control and direction in the performance of his service and that, as to such service, was customarily engaged in an independent trade or business....Unless both of these showings are made, the presumption stands that one who performs services for wages is an employee."

"The first element -- the issue of control -- is based upon a showing of control, not only with regard to the work to be done, but also with regard to the manner of performing it."

"As to the second element -- whether Claimant conducts his driving services as an 'independently established' business -- the courts have identified two factors as important in making this evaluation: (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."

The existence of a non-complete clause in the Indpt. Contractor Agreement is not dispositive. The "mere existence" of such a clause does not render the party agreeing to it an employee of the other party. Electrolux Corp. v. Bureau of Tax Operations, 705 A.2d 1357 (Pa. Cmwlth), appeal discontinued, 724 A.2d 936 (Pa. 1998). All factors must be considered. The "unique facts of each cases must be examined in order to resolve the question of employee versus independent contractor status."

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