Tuesday, February 07, 2012

UC - self-employment - businessman

Dunkelberger v. UCBR - Cmwlth. Court - February 7, 2012




The Court upheld the Board's denial of benefits pursuant to Section 402(h) of the UC, which declares self-employed individuals ineligible for unemployment compensation. The issue before the Court was whether the Board erred by finding that Claimant was ineligible for benefits as an unemployed businessman under Starinieri v. UCBR, 447 Pa. 256, 289 A.2d 726 (1972). The court affirmed.


Claimant was employed by Window World as vice-president of the corporation. He was a founder of the corporation, one-third owner of Window World, and served as one of the corporation‟s directors. In May of 2009, the corporate president, also a one-third owner, purchased a one-third interest and thereby became the majority shareholder, holding two-thirds of the. At that point, Claimant and the president were Window World‟s only directors. In August 2010, however, the president elected his wife to the board of directors, then he and his wife then used their majority vote to immediately terminate Claimant‟s employment as vice-president.


At its most fundamental level, the UC Law is purposed by the General Assembly of this Commonwealth "for the benefit of persons unemployed through no fault of their own." The Law was not intended, however, to supplement the income of individuals who become unemployed businessmen. Starinieri. Therefore, the General Assembly determined, as a matter of policy, to declare self-employed individuals ineligible for unemployment compensation. See Section 402(h) of the Law. Thus, the Law effectively embraces the notion that a self-employed individual is responsible for his own employment, and leaves him to shoulder his own burden for any loss.


The Board‟s findings here, based on information supplied by Claimant, show that until his termination, Claimant exercised substantial policymaking control over Window World. Accordingly, Claimant falls squarely within the definition that Stanieri and other cases have set out of a businessman and not an employee.


Admittedly, in enacting Section 402.4, the General Assembly set a standard for a limited class of business persons under which their eligibility for benefits is determined, not by their status, but by their ability to control their loss of employment. Further, it is undeniable that this paradigm is consistent with the overall purpose of the law to provide for persons who involuntarily lose their jobs through no fault of their own and that Starinieri and its progeny stand in contrast to this paradigm. Under Starinieri, business persons like Claimant who, by virtue of their minority shareholder status, are unable to prevent their termination of employment, even where they are devoid of fault, are still ineligible for benefits. Moreover, their loss of employment in most of these cases is not due to a failed business venture, but simply to an ouster by those who have majority control of the corporation. Nonetheless, the Starinieri doctrine has been the law for several decades and neither our Supreme Court nor the legislature has seen fit to change it. We are bound to follow these precedents. Accordingly, the Board‟s order is affirmed.

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