Moran v. UCBR - Cmwlth. Court - December 8, 2011 - unpublished memorandum decision
The court reversed the Board decision that claimant was an independent contractor.
Section 402(h) of the Law provides an employee "shall be ineligible for compensation for any week … in which he is engaged in self-employment." 43 P.S. §802(h). The legislature did not define the term self-employment in Section 402 of the Law. Therefore, this Court utilizes the language of Section 4(l)(2)(B) of the Law to fill the gap. Beacon Flag Car Co. v. UCBR, 910 A.2d 103 (Pa. Cmwlth. 2006) (holding the clear purpose of Section 402(h) of the Law is to exclude independent contractors from coverage); see also Glatfelter Barber Shop v. UCBR, 958 A.2d 786 (Pa. Cmwlth. 2008).
In pertinent part Section 4(l)(2)(B) of the Law 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 and 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).
Accordingly, both prongs of the test stated in Section 4(l)(2)(B) of the Law must be satisfied before an individual will be deemed an independent contractor. Venango Newspapers v. U CBR, 631 A.2d 1384 (Pa. Cmwlth. 1993). In employment cases, a strong presumption exists that an individual receiving wages for his services is an employee, and the burden to overcome that presumption rests on the employer. Sharp Equip. Co. v. U CBR, 808 A.2d 1019 (Pa. Cmwlth. 2002). Thus, "unless the employer can show that the employee [is] not subject to his control and direction and [is] engaged in an independent trade, occupation or profession, then [the worker is an employee]." C.A. Wright Plumbing Co. v. U CBR, 293 A.2d 126, 129 (Pa. Cmwlth. 1972) (en banc).
We conclude that Employer did not overcome the strong presumption that Claimant was an employee. While we question the Board’s determination that Employer did not exercise control over Claimant, it is clear that the Board erred in its resolution of the second prong involving an independent trade or business.
The relevant word to our inquiry for this prong is the term "independent." Danielle Viktor, Ltd. v. Dep’t of Labor & Indus., 586 Pa. 196, 892 A.2d 781 (2006). In Viktor, our Supreme Court weighed several factors in determining whether the particular claimants’ businesses, limousine driving, operated independently, including:
(1) the [workers’] ability to perform services for more than one entity, including competitors, with no adverse consequences; (2) the operation of [the workers’] businesses and [the workers’] ability to perform work did not depend on the existence of any one of the [potential employers]; and (3) the fact that [the workers] bring all necessary perquisites of providing [services] to [the employers], even though they do not own [their own tools or supplies] or bear all of the financial risk.
Id. at 229-230, 892 A.2d 801-802. As such, a worker can only be considered an independent contractor if he is in business for himself, and is not dependent on another for the continuance of employment. Id.
Here, the Board erred when it relied solely on the referee’s finding that Claimant was free to perform the same services he supplied to Employer for any other potential employer. Additionally, the Board’s consideration was limited to whether Claimant was free to compete with Employer under his contract, and not whether Claimant was actually capable of working for another enterprise. See Beacon Flag, 910 A.2d at 109 n. 11 (holding a non-compete agreement is not definitive to our determination, and "we are particularly loathe to hold … such an agreement [created] … an employer-employee relationship"). The “ability to work for more than one enterprise is an important factor in determining independent contractor status,” but it is not the only factor. Id. at 109. The Board erred in determining Claimant engaged in an independent business when its conclusion was supported by a single finding that Claimant was contractually free to work for another entity during his contract with Employer.
Additionally, Claimant did not advertise or solicit his services, as an independent business, to gain employment. It is particularly noteworthy that the parties here entered their own arrangement after Employer contacted Claimant’s past employer looking for workers. As a result, Employer hired Claimant to a full-time position lasting the duration of Employer’s then-current project, pending Claimant’s production of satisfactory work during that time. Additionally, for his services Employer paid Claimant an hourly wage rather than job-to-job or per assignment.
Thus, regardless of Claimant’s potential contractual freedom to compete with Employer, the Board’s other findings do not support the conclusion that Claimant was capable of performing engineering services as an independent enterprise for other employers. Additionally, Claimant had no experience as an independent contractor, and thus, did not have his own tools or facilities to operate independently from Employer. Lastly, Claimant’s testimony demonstrates that the nature of Claimant’s trade compelled him to seek work from only one employer, and he was dependent upon Employer for his continual employment. Therefore, Claimant was not engaged in an independent business, but rather was an employee.
Accordingly, we conclude the Board erred in finding Claimant was self-employed as an independent contractor under Sections 402(h) and 4(l
)(2)(B) of the Law. Therefore, we reverse the Board’s order.
The opinion, though not reported, may be cited "for its persuasive value, but not as binding precedent." 210 Pa. Code § 67.55. Citing Judicial Opinions.