UC - indpt. contractor - claimant's individual circumstances

Begovic v. UCBR – Cmwlth. Court – June 23, 2020 – reported decision

http://www.pacourts.us/assets/opinions/Commonwealth/out/682CD19_6-23-20.pdf?cb=1

Held: Claimant’s wages for two separate employers were earned in “employment.” Neither employer sustained its burden under  the independent contractor/self-employment exemption is set forth in section 4(l)(2)(B) of the Law, 43 P.S. §753(l)(2)(B), which provides, 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 [local service center] 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. 

This 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 control and direction in the performance of her service and that, as to such service, was customarily engaged in an independent trade or business. Beacon Flag Car Co. v. UCBR, 910 A.2d 103, 107 (Pa. Cmwlth. 2006). Unless both of these showings are made, the presumption stands that one who performs services for wages is an employee. York Newspaper Company v. UCBR, 635 A.2d 251 (Pa. Cmwlth. 1993), appeal denied, 647 A.2d 906 (Pa. 1994); Electrolux Corporation v. Department of Labor & Industry, Bureau of Employment Tax Operations, 705 A.2d 1357, 1360 (Pa. Cmwlth. 1998). 

Neither employer satisfied the second prong of the statutory test, i.e., that Claimant was actually in the business of a) canvassing public opinion or b) acting as a language interpreter for a number of health care organizations in the Pittsburgh area. 

Our Supreme Court recognized that “a worker can be considered an independent contractor only if he or she is in business for himself or herself.” Danielle Viktor, Ltd. v. Department of Labor & Industry, Bureau of Employer Tax Operations, 892 A.2d 781, 798 (Pa. 2006) (emphasis added). Our Supreme Court in Danielle Viktor, Ltd. established a three-part test for determining whether a putative employee is engaged in “an independently established trade, occupation, profession or business” under this second prong. 

Specifically, under Danielle Viktor, Ltd., we look at the following factors: (1) whether the individuals are able to work for more than one entity; (2) whether the individuals depended on the existence of the presumed employer for ongoing work; and (3) whether the individuals were hired on a job-to-job basis and could refuse any assignment. 892 A.2d at 801-02. Moreover, as part of the second prong, we must analyze whether “the claimant [was] customarily engaged in such trade or business in order to be considered self-employed.” Minelli v. UCBR, 39 A.3d 593, 598 (Pa. Cmwlth. 2012) (en banc) (emphasis in original). 

Recently, in A Special Touch v. Department of Labor and Industry, __ A.3d __ (Pa., No. 30 MAP 2019, filed April 22, 2020, slip op. at *22-23), 2020 WL 1932622 at *10, our Supreme Court clarified that the meaning of the phrase “customarily engaged” requires an individual to be “usually,” “habitually,” or “regularly” “employed” or “involved” in activity; or “employed” or “involved” in activity “according to the customs,” “general practice,” or “usual order of things.” 

The Supreme Court has instructed a putative employer must show that an individual is actually involved in an independent trade, occupation, profession, or business in order to establish that the individual is self-employed under the second prong of subsection (4)(l)(2)(B). Id. [emphasis added]  The UCBR and courts are obligated to examine “such individual[’s]” unique set of circumstances. . .  .The proper approach is to focus the inquiry on the conduct of the individual claimant. Thus, the appropriate inquiry is whether the claimant, was, in fact, customarily engaged in a trade, occupation, profession or business that was independently established. See A Special Touch. See also Glatfelter Barber Shop v. UCBR, 957 A.2d 786 (Pa. Cmwlth. 2008). 

Here, there is no indication that Claimant held herself out as being in the business of either a canvasser or interpreter for hire.

employment - non-compete agreements - Pa. SCt.

Rullex Co. v. Tel-Steam Inc. – Pa. Supreme Court – June 17, 2020

Restrictive covenants are generally disfavored in Pennsylvania as they constitute a restraint on trade that also undercuts a former employee’s ability to earn a living. . . .[citations omitted] That principle is tempered to some degree by the recognition that, in the modern business environment, such covenants can be “important business tools” which prevent individuals from “‘learning [employers’] trade secrets, befriending their customers and then moving into competition with them.’” . . . .

To be enforceable, a restrictive covenant must be incident to an employment relationship between the parties and supported by consideration; also, its restrictions must be reasonably necessary for the protection of the employer’s legitimate interests and reasonably limited in duration and geographic extent. [citations omitted] . . . .

A bright-line rule such as that utilized by the Superior Court [concerning the necessity of new consideration] could subvert the expectations of parties who fully anticipate and intend the restriction to be ancillary to the taking of employment, but the employee, for whatever reason, signs the covenant shortly after the first day. Alternatively, such an approach might unnecessarily delay an employee’s ability to begin earning income if he or she is not in a position to sign the agreement until a reasonably short period after work begins. 

Hence, the test for whether new consideration is required has not ordinarily centered on whether the employee physically executed the agreement precisely on (or before) the first day of employment. Rather, and as explained, restrictive covenants have been deemed enforceable absent fresh consideration in situations where the parties contemplated and intended that, incident to the employment relationship, the employee would be bound by its substantive terms – and the employee ultimately signed it shortly after the first day. 

This is in contrast with circumstances where a non-compete agreement is imposed on an employee essentially as a belated addition to the employment relationship. See generally Jordan Leibman & Richard Nathan, The Enforceability of Post-Employment Noncompetition Agreements Formed After At-Will Employment Has Commenced: The “Afterthought” Agreement, 60 S. CAL. L.REV. 1465, 1472 (1987) (referring to these as “afterthought agreements”). In Maintenance Specialties, Inc. v. Gottus, 455 Pa. 327, 314 A.2d 279 (1974), for example, this Court found a non-compete clause unenforceable where it was not in the original, oral employment contract, but appeared when the contract was reduced to writing the next year and was unsupported by new consideration. See id. at 330, 314 A.2d at 281. 

From the foregoing it should be evident that, for a restrictive covenant executed after the first day of employment to be enforceable absent new consideration, the parties must have agreed to its essential provisions as of the beginning of the employment relationship. Only in that circumstance will the covenant in substance be “ancillary to taking employment[.]” Pulse Techs., Inc. v. Notaro, 620 Pa. 322, 327, 67 A.3d 778, 781 (2013) (quoting Beneficial Finance, 422 Pa. at 534, 222 A.2d at 875). 

In this respect, [the employee] argues that, as with other types of agreements, there must be a meeting of the minds on the terms of [the] restrictive covenant. Thus, before preliminary negotiations ripen into contractual obligations, there must be evidence of mutual assent to the terms of a bargain. If “the parties themselves contemplate that their agreement cannot be considered complete, and its terms assented to, before it is reduced to writing, no contract exists until the execution of the writing.”  . . . . In making an assessment along these lines, it may not be necessary to prove an actual, subjective “meeting of the minds,” as objective manifestations of assent and/or an intent to be bound by the covenant’s substance can suffice. 

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This case is also reported in the PLAN Legal Update  http://planupdate.blogspot.com/ , which is searchable and can be accessed without a password.

UC - credibility - Board ultimate finder if substantial evidence

Casey Ball Supports Corporation v. UCBR – June 9, 2020 – Cmwlth. Court – unreported memorandum opinion **

We turn first to the Board’s issuance of its own decision. Contrary to Employer’s suggestion, the Board is the ultimate finder of fact in unemployment compensation cases with the power to determine credibility and evidentiary weight. Peak v. Unemployment Comp. Bd. of Review, 501 A.2d 1383, 1388 (Pa. 1985); Oliver v. Unemployment Comp. Bd. of Review, 5 A.3d 432, 438 (Pa. Cmwlth. 2010). The Board’s findings of fact are conclusive on appeal when the record, in its entirety, contains substantial evidence supporting those findings. Oliver, 5 A.3d at 438. Additionally, although Employer challenged the legality of the Board’s issuance of findings of fact, Employer failed to make specific challenges to any of those findings. Accordingly, the findings are conclusive on appeal. Campbell v. Unemployment Comp. Bd. of Review, 694 A.2d 1167, 1169 (Pa. Cmwlth. 1997). 

Where, as here, both parties submitted evidence, there was no need for the Board to specify why it deviated from the referee’s findings of fact and conclusions of law. Peak, 501 A.2d at 1386-87; Hasely v. Unemployment Comp. Bd. of Review, 553 A.2d 482, 487 (Pa. Cmwlth. 1989). Consequently, the fact that the referee personally observed the witnesses is of no moment. 

Finally, as long as there is substantial evidence for the Board’s findings, “[t]he fact that Employer may have produced witnesses who gave a different version of the events, or that Employer might view the testimony differently than the Board, is not grounds for reversal . . . .” Tapco, Inc. v. Unemployment Comp. Bd. of Review, 650 A.2d 1106, 1108-09 (Pa. Cmwlth. 1994). Here, the Board credited Claimant’s testimony and we cannot overturn that credibility determination on appeal. 

Fitzpatrick v. Unemployment Comp. Bd. of Review, 616 A.2d 110, 111 (Pa. Cmwlth. 1992). We are bound to view the evidence in the light most favorable to Claimant, as the party who prevailed before the Board, and give her the benefit of all inferences that can logically and reasonably be drawn from the testimony. Chapman v. Unemployment Comp. Bd. of Review, 20 A.3d 603, 607 (Pa. Cmwlth. 2011). 

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This case is also reported in the PLAN Legal Update  

http://planupdate.blogspot.com/ , which is searchable and can be accessed without a password.

**An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

UC - voluntary quit - safety concerns - objective evidence

Morgan v. UCBR – Cmwlth. Court – May 29, 2020 – unreported* memorandum opinion

Claimant that it was necessary for him to quit his job out of fear for the safety of the children served by Employer and “concern” for his own professional reputation if he continued to work for Employer under circumstances involving alleged child neglect. 

. . . The Board and Employer7 argue that Claimant failed to meet his burden, because he did not sufficiently describe any reasons for his concerns or fears before the Referee but instead made nonspecific, conclusory statements that conditions were unacceptable. The Board also emphasizes Claimant’s admission that he spoke only to his friends—not to Employer—about his concerns, and that he did not discuss his concerns with anyone until the day before he voluntarily quit. 

We agree with the Board and Employer that Claimant failed to establish a necessitous and compelling reason to quit. Although safety concerns may give rise to such reasons, the claimant must “demonstrate[] by objective evidence” that the workplace is actually unsafe, and “‘fears’ alone do not constitute a compelling reason to resign.” Green Tree Sch. v. Unemployment Comp. Bd. of Review, 982 A.2d 573, 578 (Pa. Cmwlth. 2009). Here, Claimant offered no objective evidence that the conditions of his employment were unsafe, either for himself or for the children served by Employer. Accordingly, Claimant failed to demonstrate circumstances that exerted real and substantial pressure on him to terminate his employment. 

Whether a claimant had cause of a necessitous and compelling nature for leaving work is a question of law subject to this Court’s review. Brunswick Hotel & Conference Ctr., LLC v. Unemployment Comp. Bd. of Review, 906 A.2d 657, 661 (Pa. Cmwlth. 2006). A claimant who voluntarily terminates his employment “bears the burden of proving that necessitous and compelling reasons motivated that decision.” Fitzgerald v. Unemployment Comp. Bd. of Review, 714 A.2d 1126, 1129 (Pa. Cmwlth. 1998), appeal denied, 794 A.2d 364 (Pa. 1999). To establish cause of a necessitous and compelling nature, a claimant must establish: (1) circumstances existed that produced real and substantial pressure to terminate employment, (2) like circumstances would compel a reasonable person to act in the same manner, (3) the claimant acted with ordinary common sense, and (4) the claimant made a reasonable effort to preserve his employment. Procito v. Unemployment Comp. Bd. of Review, 945 A.2d 261, 264 (Pa. Cmwlth. 2008) (en banc). 

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*An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

evidence- digital evidence - Rule 901

Order – effective date 10-01-2020

http://www.pacourts.us/assets/opinions/Supreme/out/Order%20Entered-attach%20-%20104429584100888982.pdf?cb=1

Rule 901         http://www.pacourts.us/assets/opinions/Supreme/out/Order%20Entered-attach%20-%20104429584100888982.pdf?cb=1

Final report   http://www.pacourts.us/assets/opinions/Supreme/out/Order%20Entered-report%20-%20104429584100889049.pdf?cb=1

admin. law - legislative-rulemaking

http://www.pacourts.us/assets/opinions/Commonwealth/out/674MD16_5-12-20.pdf?cb=1

Hommrich v. PUC – May 12, 2020 – Cmwlth. Court – reported decision

This is a PUC case but has some issues of general relevance.

Legislative Rule-Making v. Interpretive Rule-Making

The Supreme Court of Pennsylvania “has long recognized the distinction in administrative agency law between the authority of a rule adopted pursuant to an agency’s legislative rule-making power and the authority of a rule adopted pursuant to interpretive rule-making power.” Popowsky v. Pennsylvania Public Utility Commission, 910 A.2d 38, 53 (Pa. 2006) (citations omitted).

“Legislative rule-making [emphasis added] is an exercise of legislative power by an administrative agency, pursuant to a grant of legislative power by the legislative body, and is valid and is as binding upon a court as a statute if it is: (a) within the granted power, (b) issued pursuant to proper procedure, and (c) reasonable.” Id.; accord Tire Jockey Service, Inc. v. Department of Environmental Protection, 915 A.2d 1165, 1186 (Pa. 2007). “Generally, a legislative regulation establishes ‘a substantive rule creating a controlling standard of conduct.’” Borough of Pottstown v. Pennsylvania Municipal Retirement Board, 712 A.2d 741, 743 (Pa. 1998) (quoting Slippery Rock Area School District v. Unemployment Compensation Board of Review, 983 A.2d 1231, 1236 (Pa. 2009)). 

“An interpretative rule [emphasis added] on the other hand depends for its validity not upon a law-making grant of power, but rather upon the willingness of a reviewing court to say that it in fact tracks the meaning of the statute it interprets.” Popowsky, 910 A.2d at 53. Legislative regulations are binding whereas interpretative regulations are merely entitled to deference. Slippery Rock, 983 A.2d at 1236.

All regulations, whether legislative or interpretative, “must be consistent with the statute under which they were promulgated.” Popowsky, 910 A.2d at 53.

PUC’s Granted Power – does the regulation fall within Legislature’s grant of authority?

“To determine whether a regulation is adopted within an agency’s granted power, we look for statutory language authorizing the agency to promulgate the legislative rule and examine that language to determine whether the rule falls within the grant of authority.” Marcellus Shale Coalition v. Department of Environmental Protection, 216 A.3d 448, 459 (Pa. Cmwlth.), appeals quashed, 223 A.3d 655 (Pa. 2019) (citing Slippery Rock, 983 A.2d at 1239-41).

We consider “the purpose of the statute and its reasonable effect” and whether “the regulation is consistent with the enabling statute.” Id. “Clearly[,] the legislature would not authorize agencies to adopt binding regulations inconsistent with the applicable enabling statutes.” Slippery Rock, 983 A.2d at 1241.

When regulation conflicts with the statute

“When . . . a regulation presents ‘an actual conflict with the statute,’ we cannot reasonably understand the regulation to be within the agency’s ambit of authority, and the statute must prevail.” Marcellus Shale, 216 A.3d at 459 (quoting AMP Inc. v. Commonwealth, 814 A.2d 782, 786 (Pa. Cmwlth. 2002), aff’d, 852 A.2d 1161 (Pa. 2004)). Indeed, “a regulation that is at variance with a statute is ineffective to change the statute’s meaning.” Geisinger Health System v. Bureau of Workers’ Compensation Fee Review Hearing Office (SWIF), 138 A.3d 133, 139 (Pa. Cmwlth. 2016). 

“That is so because ‘the power of an administrative agency to prescribe rules and regulations under a statute is not the power to make law, but only the power to adopt regulations to carry into effect the will of the Legislature as expressed by the statute.’” Id. (quoting Volunteer Firemen’s Relief Association of the City of Reading v. Minehart, 227 A.2d 632, 635-36 (Pa. 1967)). “When an agency adopts regulations at variance with the statute, the regulations, and not the statute, fall by the wayside.” Id. (citing Union Electric Corporation v. Board of Property Assessment, Appeals and Review of Allegheny County, 721 A.2d 823 (Pa. Cmwlth. 1998), rev’d on other grounds, 746 A.2d 581 (Pa. 2000)).

Broad grant of power v. narrow grant of power to agency
Sometimes, the General Assembly confers broad power. For example, in Section 201(a) of the Unemployment Compensation Law,7 the General Assembly vested power in the Department of Labor and Industry (L&I) “to adopt, amend, and rescind such rules and regulations . . . as it deems necessary or suitable. Such rules and regulations shall not be inconsistent with the provisions of this act.” In Slippery Rock, our Supreme Court described this power as “broad” and one that encompassed L&I’s authority “to define by regulation terms otherwise undefined by the statute.” Slippery Rock, 983 A.2d 1239. In Pennsylvania Human Relations Commission v. Uniontown Area School District, 313 A.2d 156, 168-71 (Pa. 1973), the Supreme Court held that similar statutory language in Section 7(d) of the Pennsylvania Human Relations Act8 allowed the PHRC to promulgate a regulation that defined “de facto segregation” in such a way that it imposed strict desegregation standards and new accompanying duties on public schools.  In contrast, the powers the General Assembly conferred to the PUC under the AEPS Act are much narrower. Sunrise Energy, 148 A.3d at 901. . . .

We recognize the PUC’s broad authority in regulating public utilities under the Code. As this Court recently opined, “the General Assembly intended the PUC to occupy the field of public utility regulation, in the absence of an express grant of authority to the contrary.” Delaware Riverkeeper Network v. Sunoco Pipeline L.P., 179 A.3d 670, 692 (Pa. Cmwlth.), appeal denied, 192 A.3d 1106 (Pa. 2018). However, we are not dealing with “public utilities” here. See 66 Pa. C.S. §102 (definition of “public utility”). Rather, the AEPS Act applies to “customer-generators,” which by definition are not public utilities. See Section 2 of the AEPS Act, 73 P.S. §1648.2. 

We, therefore, conclude that the PUC’s authority in this matter derives solely from the AEPS Act, and not the Code. . . .Under the AEPS Act, the PUC’s authority is limited to developing “technical and net metering interconnection rules.” Section 5 of the AEPS Act, 73 P.S. §1648.5.

Reasonableness
In deciding whether a legislative regulation is reasonable. . . .a court may not substitute its own judgment for that of the agency. To demonstrate that the agency has exceeded its administrative authority, it is not enough that the prescribed system of accounts shall appear to be unwise or burdensome or inferior to another. Error or lack of wisdom in exercising agency power is not equivalent to abuse. What has been ordered must appear to be so entirely at odds with fundamental principles as to be the expression of a whim rather than an exercise of judgment. Tire Jockey, 915 A.2d at 1186 (internal quotations and citations omitted); accord Slippery Rock, 983 A.2d at 1242.

“[A]ppellate courts must accord deference to the agency and may only overturn an agency determination if the agency acted in bad faith or the regulations constituted a manifest or flagrant abuse of discretion or a purely arbitrary execution of the agency’s duties or functions.” Popowsky, 910 A.2d at 55; accord Tire Jockey, 915 A.2d at 1186.

However, when there is express, contradictory language in the statute conferring regulatory authority, a proposed regulation would be deemed “unreasonable.” See Keith v. Commonwealth, 151 A.3d 687, 695 (Pa. Cmwlth. 2016). Nevertheless, “where legislative rules are adopted within the agency’s granted power and issued pursuant to proper procedure, they enjoy a presumption of reasonableness.” Marcellus Shale, 216 A.3d at 460.

consumer - debt collection - FDCPA - oral v. written dispute of validity of debt

Riccio v. Sentry Credit – 3d Cir. – March 30, 2020

https://www2.ca3.uscourts.gov/opinarch/181463p.pdf

A panel of this Court previously concluded § 1692g(a)(3) requires that “any dispute, to be effective, must be in writing.” Graziano, 950 F.2d at 112. Yet reading the statutory text with fresh eyes—and more importantly, with the past three decades of Supreme Court statutory- interpretation caselaw—we think § 1692g(a)(3) permits oral disputes. The plain language and meaning § 1692g(a)(3) permits a debtor to dispute a debt orally. 

Other courts have reached the same conclusion. The Second, Fourth, and Ninth Circuits reject a writing requirement, openly splitting with Graziano. See Clark v. Absolute Collection Serv., Inc., 741 F.3d 487, 490-91 (4th Cir. 2014) (per curiam); Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282, 285-86 (2d Cir. 2013); Camacho v. Bridgeport Fin. Inc., 430 F.3d 1078, 1080-81 (9th Cir. 2005). And without noting the split, the First, Fifth, Sixth, and Seventh Circuits have taken the same position. See Macy v. GC Servs. Ltd., 897 F.3d 747, 757- 58 (6th Cir. 2018); Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 347 n.6 (7th Cir. 2018); Sayles v. Advanced Recovery Sys., Inc., 865 F.3d 246, 249-50 (5th Cir. 2017); Brady v. Credit Recovery Co., 160 F.3d 64, 66- 67 (1st Cir. 1998). 

In sum, we no longer think § 1692g(a)(3) requires written disputes. Simply put, “Congress did not write the statute that way.” United States v. Naftalin, 441 U.S. 768, 773 (1979). Subsections (a)(4), (a)(5), and (b) command a written dispute; (a)(3) does not. “We would not presume to ascribe this difference to a simple mistake in draftsmanship.” Russello, 464 U.S. at 23. 

In short, we conclude that debt collection notices sent under § 1692g need not require that disputes be expressed in writing. In doing so, we overrule Graziano’s contrary holding. Because Sentry Credit’s notice perfectly tracked § 1692g’s text, we will affirm the judgment of the District Court. 

language access - LEP - criminal defendant - right to counsel

Cmnwlth. v. Diaz – Pa. Supreme Court – March 26, 2020 (5-2) 

http://www.pacourts.us/assets/opinions/Supreme/out/J-57-2019mo%20-%2010438223398893021.pdf?cb=1 - majority

In this discretionary appeal, the Commonwealth challenges the Superior Court’s application of United States v. Cronic, 466 U.S. 648 (1984), to find that trial counsel’s failure to secure a Spanish language interpreter for Miguel Diaz (“Diaz”) on the first day of his criminal trial constituted per se prejudice as Diaz was not a native English speaker and could not fully understand the proceedings. 

We conclude that where the absence of a needed interpreter at a critical stage of trial obstructs his ability to communicate with counsel, Cronic applies such that the defendant need not prove that he or she was prejudiced by a Sixth Amendment violation. Based on the record and the standard by which we review this case, we find that the Superior Court correctly concluded that Cronic was applicable and that no specific showing of prejudice was required because of the absence of an interpreter on the first day of trial during critical stages of the proceeding. 

Dissent – Dougherty - http://www.pacourts.us/assets/opinions/Supreme/out/J-57-2019do%20-%2010438223398874590.pdf?cb=1

Dissent- Mundy - http://www.pacourts.us/assets/opinions/Supreme/out/J-57-2019do1%20-%2010438223398874557.pdf?cb=1

UC - Board erred in raising an issue not raised by claimant, employer, or Department

Quigley v. UCBR – Commonwealth Court – en banc – reported decision – January 28, 2020

Majority (5) & dissent (2) http://www.pacourts.us/assets/opinions/Commonwealth/out/1449CD17_1-28-20.pdf?cb=1

N.B. This case was litigated by Julia Simon-Mishel of PLA.

In a 5-2 en banc decision, the Court held that the UCBR erred when it addressed an issue (claimant’s alleged self-employment v. sideline activity) when neither the separating employer nor the Department had raised the issue.  

The case came before the UCBR when claimant appealed from UCSC and referee decisions finding her eligible for benefits but deducting what claimant believed to be an incorrect amount, based on her sideline earnings.  Also of note: claimant’s request for continuance of the referee hearing was denied, and she did not attend the hearing. 

On appeal to the Board, the UCBR reversed the referee, holding that claimant was not eligible for benefits in any amount, because she had not presented any evidence that she qualified for the sideline activity exception under sec. 402(h) of the UC Law, 43 P.S. sec. 802(h), which says that a person is not eligible to get UC when “engaged in self-employment” provided however, the such work is a sideline activity, that is – it is not the claimant’s “primary source of livelihood.”

Majority opinion

Specifically noting the remedial nature of the UC Law under sec. 3, 43 P.S. sec. 752, the court held that the Board exceeded its admittedly broad right of review of a referee decision, because “Claimant’s eligibility was never in dispute. Both the UC Service Center and the Referee held that she was eligible for unemployment benefits because her self-employment was limited to a sideline activity. Employer did not contest her eligibility, and neither did the Department. Rather than decide the controversy presented, which pertained to benefit calculation, the Board transformed the nature of the controversy to one of benefit eligibility. This was problematic because there was in fact no controversy over Claimant’s eligibility. Consequently, Claimant had no notice that the Board would review her eligibility, because it had not been contested by Employer or by the Department.”

due process – notice – opportunity to be heard -- The court decided that under the circumstances, claimant had been denied due process. “Although the regulation at 34 Pa. Code §101.87 authorizes a tribunal to consider all “issues expressly ruled upon” below, the appeal process must still comport with due process. Thus, there must be a controversy between at least two of the parties at every stage of the appeal. . . .” – not the case here, absent an appeal by either the employer or Department.

After denying the claimant’s request for continuance and in her absence, the UCBR “decided her appeal on the basis of the Department’s records. The Board reversed because Claimant did not appear at the Referee hearing to prove her eligibility, and then the Board refused to give Claimant an opportunity to explain her nonappearance. Fundamental due process requires notice and an opportunity to be heard, and this constitutional principle must inform the Department’s procedural rules for unemployment compensation appeals.”

The court was careful to note the precise circumstances of the case: “Our holding limited to the circumstances presented in the case sub judice, i.e., where the claimant, through no fault of her own, becomes unemployed; where the claimant is found to be eligible for unemployment benefits and no party challenges her eligibility; and where, on review of the claimant’s appeal of the computation of her unemployment benefit amount, the Board sua sponte raises the issue of her eligibility for benefits.”

Due process - commingling of functions – The court agreed with the claimant “the Board applied the Department regulations in a way that improperly commingled the Department’s prosecutorial and adjudicatory functions. This violates due process as our Supreme Court established in Lyness v. State Board of Medicine, 605 A.2d 1204, 1209-10 (Pa. 1992).”

The “UC Service Center determined that Claimant was entitled to benefits under Section 402(h) of the Law, subject to a weekly deduction for her sideline business income. Claimant appealed, challenging only the monetary amount of the deduction. Indeed, Claimant could not have appealed the issue of her eligibility for benefits under the sideline business provision of Section 402(h) of the Law because she was not aggrieved by that determination. The only portion of the UC Service Center determination, and later Referee decision, that Claimant could have appealed was the amount of prorated earnings that determined her weekly deduction. 

The Referee held a de novo hearing, in which the Department could have participated. It did not. Similarly, if the Department had an issue with the Referee’s decision to affirm the UC Service Center’s eligibility determination, it could have appealed to the Board. It did not. The Board reversed Claimant’s eligibility even though that issue could not have been raised by Claimant, but only by the Department or Employer. By doing so, the Board put itself in the role of the adversary, and in the case of self-employment, within the prosecutorial role of the Department. Such commingling of prosecutorial and adjudicatory functions is improper.”

The court held that the “ ‘prosecutorial’ actor in all unemployment compensation matters is the Department, and it may challenge any determination on eligibility for benefits. Although it is the employer that typically opposes a claimant’s eligibility, we cannot just ignore the Department’s statutory prosecutorial role, as do the dissenting judges. The Board’s function is solely adjudicatory. It must not take on the Department’s prosecutorial function by revisiting the referee’s holding on benefit eligibility unless the Department raises that challenge.” In UC cases, the “Board’s function is solely adjudicatory.”

The majority thus concluded that

Claimant, through no fault of her own, became unemployed; was ruled eligible for unemployment benefits; and no party challenged her eligibility. On review, the Board sua sponte raised the eligibility issue and prevented Claimant from presenting evidence. Simply, the Board denied Claimant a fair hearing. Further, the Board erred by assuming the prosecutorial role of the Department when it raised the issue of Claimant’s eligibility for benefits and held that she was ineligible. In commingling the prosecutorial and adjudicatory functions, the Board created an appearance of impropriety and bias. The Board’s actions have contravened the remedial purpose of the Law, due process and fundamental fairness. 

For these reasons, we vacate the Board’s order and remand the matter to the Board to remand to a referee to conduct a hearing to determine whether the deduction from Claimant’s weekly benefit amount for her sideline business income was properly calculated. 

Dissent of Judge Cohn Jubilerer

The judge felt that the majority “examined this matter sympathetically rather than legally, as reflected in its deviation from the Law, the regulations, and longstanding precedent. . . .”

Section 3 “remedial purpose” language “may not, in ‘the pretext of pursuing its spirit,’ disregard the Law’s clear and unambiguous language. Thus, in addition to excluding those who are unemployed due to their own fault, whether by voluntarily quitting without cause of a necessitous, compelling nature or engaging in willful misconduct connected with their work, the General Assembly excluded those who are engaged in self-employment.. . . . It has long been held that the Law is not intended to protect those who are engaged in business for themselves or who are failed entrepreneurs. . . . Although there is an exception to this exclusion, the sideline business exception, which is at issue here, that exception requires the claimant to establish that the sideline business was not the claimant’s primary livelihood. [editor’s note – there should have been some specific discussion about burden of proof].

The Board has a duty to consider all issues in the case.  There is “nothing in the regulations indicate that the Board’s obligation to review those issues expressly ruled upon is subject to the approval of the parties. 43 P.S. § 824; 34 Pa. Code §§ 101.87, 101.107(b). The Court should also be guided by the long established principle that, in addition to the Board’s fact finding role set forth in Section 504 and the regulations, the Board “has a duty to protect the [UC] fund from ineligible claimants and to investigate all the facts in a given case.” 

A “determination regarding the rate of compensation in self- employment cases by its very nature encompasses the question of eligibility for those benefits under Section 402(h) of the Law. Section 402(h) provides that an employee is ineligible for benefits if the employee engages in self-employment. 43 P.S. § 802(h). The exception to this ineligibility, also found in Section 402(h), is the sideline business exception – which is the exception Claimant relies upon to claim she is not ineligible for UC benefits. 

To qualify for this exception, Claimant had to establish that: (1) the self-employment began prior to the termination of the full- time employment; (2) the self-employment continued without substantial change after the employee’s termination; (3) the employee remained available for full-time employment; and “(4) the self-employment was not the primary source of [her] livelihood.”. . . .Under this standard, the Section 402(h) inquiry considers a claimant’s self-employment income for purposes of both eligibility (that it was not the primary source of the claimant’s livelihood) and the weekly rate of compensation (by how much the claimant’s UC benefits should be reduced) should the exception be established. Therefore, an appeal as to the rate of compensation, which requires a review of the claimant’s self-employment income, necessarily implicates questions of eligibility and vice versa. An appeal as to one is an appeal to both. 

Second, and more importantly, the Board was required to review the question of Claimant’s eligibility under the Law, the regulations, and longstanding precedent because that issue had been ruled upon by both the local service center and the Referee. The Referee specifically held that Claimant was “NOT DISQUALIFIED from receiving compensation under [Section 402(h)].” . . . .As discussed, under Section 504 of the Law the Board is the ultimate fact finder that determines a claimant’s eligibility for benefits based on its de novo review. Per that section, “[t]he [B]oard shall have power . . . on appeal . . . [to] review any claim . . . decided by[] a [R]eferee . . . .” 43 P.S. § 824. . . The Department’s regulations similarly reflect that issues expressly ruled upon by either a local service center or a Referee are subject to the Board’s ultimate review. 

Since 1981, this Court has consistently held that these provisions give the Board jurisdiction to consider any issue expressly ruled upon in the determination being appealed even though the appealing party “did not intend to reopen the inquiry into . . . issue[s that] had been resolved in [the party’s] favor.” . . .  In.Black Lick Trucking, Inc. v. Unemployment Comp. Bd. of Review, 667 A.2d 454, 457 (Pa. Cmwlth. 1995) we explained that these provisions “mean that whatever issues the [local service] center addressed the [R]eferee should likewise address, and the Board in turn should decide all of the issues the [R]eferee considered, regardless of whether a party specifically raised the issue on appeal.” 667 A.2d at 457. 

admin. law - federal ALJs - appointments clause - ED Pa. case

Sanchez v. Commissioner – ED Pa. – January 29, 2020

https://www.paed.uscourts.gov/documents/opinions/20D0078P.pdf

Ana Luz Sanchez (“Plaintiff”) seeks judicial review, pursuant to 42 U.S.C. § 405(g), of the final decision of the Commissioner of the Social Security Administration (“the Commissioner”) denying her claim for Disability Insurance Benefits (“DIB”) and Supplemental Security Income (“SSI”) under Titles II and XVI of the Social Security Act.

In her request for review, Plaintiff raises four claims, one which is premised on Lucia v. Securities and Exchange Commission, 138 S. Ct. 2044 (2018), that the administrative law judge (“ALJ”) who decided her case was not appointed in compliance with the Appointments Clause of the U.S. Constitution.....The Defendant argues that Plaintiff forfeited this claim by not challenging the ALJ’s appointment in the agency proceeding....

After careful review and following the Third Circuit decision on January 23, 2020 in Cirko v. Comm’r of Soc. Sec. and Bizarre v. Comm’r of Soc. Sec., ___ F.3d ___, 2020 WL 370832 (3d Cir. Jan. 23, 2020), and for the reasons set forth below, the Court finds that the ALJ was improperly appointed under the Constitution and Plaintiff did not forfeit her Appointments Clause claim. Therefore, Plaintiff’s request for review is granted, and this matter will be remanded to the Commissioner for further proceedings in accordance with the following memorandum.

wages - FLSA - settlement - confidentiality agreement, general release - sever ability

Solkoff v. Penn State University -  ED Pa. January 23, 2020

The parties’ settlement of plaintiff’s Fair Labor Standards Act case was approved by the court, except for the confidentiality agreement and plaintiff’s general release, which the court held could be severed from the rest of the agreement.

Frustration of FLSA

The confidentiality clause and release clause frustrate the FLSA’s purpose. The central purpose of the FLSA was to provide a remedy for the consequences resulting from “the unequal bargaining power as between employer and employee.” Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945). One of the main consequences of unequal bargaining power was substandard wages, thus the FLSA sought “to secure for the lowest paid segment of the nation's workers a subsistence wage.” Kraus v. PA Fit II, LLC, 155 F. Supp. 3d 516, 525 (E.D. Pa. 2016) (citing D.A. Schulte v. Gangi, 328 U.S. 108, 114 (1946)). In accordance with this central purpose, the general releases and confidentiality clauses in FLSA settlement agreements will be rejected. 

Confidentiality clause

Generally, confidentiality clauses in FLSA settlement agreements frustrate the purpose of the FLSA by facilitating information asymmetry that hinders FLSA enforcement. 

The defendant’s employees, as well as the public at large, have an interest in ensuring fair wages and thus an interest in information about the defendant’s settlement of claims alleging a failure to provide fair wages. . . And by preventing plaintiffs from discussing their cases with other potentially harmed employees, approval of “confidentiality clauses would create new imbalances of information between Defendants and their employees.” . . . In creating this information asymmetry, confidentiality clauses stifle the robustness of FLSA enforcement by creating an obstacle to detecting FLSA violations and to vindicating FLSA rights. 

Under certain circumstances, a confidentiality clause may be approved if it is limited to prevent its undermining the purpose of the FLSA. In certain cases, the purpose of the FLSA may not be frustrated by a confidentiality clause that does not create information asymmetry between the defendant and his employees, namely by allowing the plaintiff to discuss the case and settlement with other employees, but not the media. The purpose of the FLSA is frustrated when alleged FLSA violations by an employer are concealed from its employees and the public. Therefore, contractually binding Plaintiff to make reasonable efforts to maintain confidentiality regarding this settlement will be disapproved. 

General release

The broad release of claims that includes unrelated claims and claims unknown to the plaintiff frustrates the purpose of the FLSA by allowing employers to use their superior bargaining power to disadvantage FLSA claimants. Overbroad release provisions in FLSA settlement agreements subvert the goal of remedying the consequences of unequal bargaining power. 

Because, unlike the confidentiality provision, the release provision is explicitly not severable, the Court will not approve the settlement agreement. 

certified legal interns - bar admission rules

Rule    http://www.pacourts.us/assets/opinions/Supreme/out/attach%20-%2010429709292301783.pdf?cb=1

Order http://www.pacourts.us/assets/opinions/Supreme/out/Order%20Entered%20-%2010429709292301277.pdf?cb=1