Saturday, January 16, 2016

UC - employee v. independent contractor

Weaver Hauling & Excavating,LLC v. Dept. of Labor and Industry, Office of UC Tax Services –


Weaver Hauling’s petition for reassessment of UC tax rejected.    Employees were neither self-employed partners nor independent contractors, but, in fact, employees under the UC Law.

Weaver set up scheme under which employees had to buy into company, for modest fee.  However, Weaver was set up as an LLC, not a partnership. 

Presumption of that a person is an “employee”
Section 4(l)(2)(B) of the Law “presumes that an individual is an employee.” Beacon Flag Car Co., Inc. (Doris Weyant) v. UCBR, 910 A.2d 103, 107 (Pa. Cmwlth. 2006).   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 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.

Wages are defined as “all remuneration . . . paid by an employer to an individual with respect to his employment.” Section 4(x) of the Law, 43 P.S. § 753(x). If the (continued…) whether the entity in question is a partnership or an LLC. See Watson v. UCBR, 491 A.2d 293, 295-96 (Pa. Cmwlth. 1985). 20 Department shows that an individual has performed services for wages, an employer may thus rebut the presumption of employment by demonstrating that the individual meets the criteria listed in Section 4(l)(2)(B) of the Law. CE Credits Online v. Unemployment Comp. Bd. of Review, 946 A.2d 1162, 1167 (Pa. Cmwlth.), appeal denied, 971 A.2d 493 (Pa. 2009). “Unless both of these showings are made, the presumption stands that one who performs services for wages is an employee.” Beacon Flag Car Co., Inc., 910 A.2d at 107.

Employee v. independent contractor – burden  and burden shifting
After the Department demonstrated that Weaver’s members received wages, the burden shifted to Weaver to show that “the [individual]’s services are performed free of the employer’s control and the [individual]’s services are the type performed in an independent trade or business.” CE Credits Online, 946 A.2d at 1167. As to the control prong of this test, the court Court has explained:

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 [individual]’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; and, whether the employer had the right to monitor the [individual]’s work and review performance.

Quality Care Options v. UCBR, 57 A.3d 655, 660 (Pa. Cmwlth. 2012).  “No single factor is controlling; therefore, the ultimate conclusion must be based on the totality of the circumstances.” Id.   We agree with the Department that Weaver did not satisfy its burden to show that its members were free from its control and direction.  There was “insufficient evidence presented overall indicating that the member and not the firm controlled the means and methods of how work was done.” Payments were largely based on services performed. There was no evidence presented relating to whether Weaver supplied the tools necessary for its members’ work, whether Weaver provided on-the-job training, whether Weaver set the time and location of work, or whether Weaver monitored its members’ work.  Based on the totality of the circumstances, Weaver did not satisfy its burden.   The court therefore rejected Weaver’s argument that the Department erred in concluding that the members of Weaver were employees rather than independent contractors.

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