Monday, January 11, 2016

UC - wages - lack of W-2 not dispositive

Clark v. UCBR - Cmwlth. Court – December 23, 2015

In a case involving amount of qualifying wages and indpt. contractor v. employee, the court held that the claimant did earn sufficient “wages” to qualify for benefits under sec. 4(w)(2) of the UC Law, 43 P.S. 753(w)(2), and was an “employee” rather than an independent contractor.  The claimant had received benefits during a preceding year and had to show receipt of wages in excess of six times his WBR, under sec. 753 (w)(2) in order to establish eligibility.  The claimant furnished documentation in the form of payment logs but no W-2s.

The court reversed the UCBR and held that
            - the claimant had established his status as an employee rather than an independent contractor (IC), and
            - the lack of W-2s from the employer was not alone enough to show that he was an IC.   
            - claimant earned sufficient wages in employment to establish eligibility.
            - He worked on an as-needed basis for several different employers, none of whom furnished him with W-2s.

 “A claimant has the burden of proving financial eligibility for UC benefits.” Logan v. UCBR, 103 A.3d 451, 453 (Pa. Cmwlth. 2014).   Here, Claimant did provide evidence of payment for work, but the question remains, however, whether those  earnings were “wages [from] ‘employment.’” 43 P.S. § 753(w)(2).   The Law defines “[w]ages” as “all remuneration . . . paid by an employer to an individual with respect to his employment . . . . ” 43 P.S. § 753(x). “Employment” is defined therein as “all personal service performed for remuneration by an individual under any contract of hire, express or implied, written or oral[.]” 43 P.S. § 753(l)(1).   

The UCBR determined that Claimant was self-employed because he did not receive W-2 Forms and, thus, he “earned no wages in employment.”    “The term ‘self-employment’ is not defined in the Law; however, the courts have relied upon [S]ection 4(l)(2)(B) of the Law, 43 P.S. § 753(l)(2)(B), to fill the void . . . .” Beacon Flag Car Co., Inc. v. UCBR,  910 A.2d 103, 107 (Pa. Cmwlth. 2006).  Section 4(l)(2)(B) of the Law states, in pertinent part:  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 [D]epartment 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. 43 P.S. § 753(l)(2)(B) (emphasis added). 10 “[T]he existence of an employer/employee relationship is a question of law that depends upon the unique facts of each case.” Res. Staffing, Inc. v. UCBR, 961 A.2d 261, 263 (Pa. Cmwlth. 2008).

However, “there is a presumption in the . . . Law  that an individual receiving wages is an employee and not . . . engaged in selfemployment.” Training Assocs. Corp. v. UCBR, 101 A.3d 1225, 1233 (Pa. Cmwlth. 2014) Self-employment requires a positive act of establishing a private enterprise or independent business. See Staffmore, LLC v. UCBR, 92 A.3d 844 (Pa. Cmwlth. 2014); see also Kirk v. UCBR, 425 A.2d 1188 (Pa. Cmwlth. 1981); Miller v. UCBR  (Pa. Cmwlth. 1979). “[T]he fact that an unemployed person . . . accept[s] an occasional offer of work is simply not enough to demonstrate that said individual is customarily engaged in an independently established trade, occupation, profession or business[]” and, therefore, self-employed.11 Minelli v. UCBR,, 39 A.3d 593, 598 (Pa. Cmwlth. 2012).

The evidence in this case “the evidence in this case did not overcome the strong presumption that Claimant was an employee of the various concerns that he worked for.  There is no evidence that Claimant had established a private enterprise or independent business through which he provided services.  The mere fact that Claimant did not receive W-2 Forms from those entities is not conclusive of self-employment. In fact, in concluding whether an employment relationship exists, “[n]o single factor is controlling, [] therefore, the ultimate conclusion must be based on the totality of the circumstances.”  Res. Staffing, Inc., 961 A.2d at 264. Thus, although a W-2 Form may be one type of evidence that an individual earned wages in employment and was not self-employed, this Court has found no precedent under which such documentation was the only conclusive evidence of earnings sufficient to satisfy Section 4(w)(2) of the Law. 

Lack of a W-2 Form cannot alone be sufficient to establish independent contractor relationship, especially because a W-2 Form is an employer-issued form.   The Department did not offer any evidence to overcome the “strong presumption” that an employment relationship existed.   The lack of W-2 forms is not dispositive.

If the case is old, the link may have become stale and may not work, but you can use the case name, court, and date to find the opinion in another source (e.g., Westlaw, Lexis, Google Scholar)