Formularo
Catering, Inc. v. Department of Labor
and Industry
Reassessment
of employer’s UC taxes upheld by court, which determined that employees which
employer claimed were “casual laborers” were “employees” under the UC Law, and
not independent contractors.
The
court upheld the Department’s conclusion that the individuals were engaged in
employment under section 4(l)(2)(B) of the Law, 43 P.S. §753(l)(2)(B),
that it had satisfiend its burden of showing that the individuals performed
services for wages. Specifically, and that it proved an employer-employee
relationship between Famularo and the individuals.
In
determining whether an individual is engaged in “employment” or in the work of
an independent contractor under section 4(l)(2)(B) of the Law, the Department bears the initial burden of
showing that the individual provided services in exchange for wages. Tobey-Karg Sales Agency, Inc. v.
Pennsylvania Department of Labor and Industry, 34 A.3d 899, 903 (Pa.
Cmwlth. 2011). “[A] person receiving remuneration for services rendered is presumed
to be employed and therefore to have ‘employment’ within the meaning of the
[Law] . . . .” Electrolux Corporation v. Department of Labor and Industry,
Bureau of Employer Tax Operations, 705 A.2d 1357, 1359-60 (Pa. Cmwlth. 1998)
(emphasis added).
Once the Department meets its burden, the burden shifts to
the employer to show that the individual “‘(a) has been and will continue to be
free from control or direction over the performance of his or her services
[a]nd (b) is customarily engaged in an independent trade.’” Tobey-Karg,
34 A.3d at 903 (citation omitted). Unless the employer proves both elements, the
presumption of employment stands. Beacon Flag Car Company (Doris Weyant) v.
Unemployment Compensation Board of Review, 910 A.2d 103, 107 (Pa. Cmwlth.
2006).
Here,
the Department credited testimony that Famularo issued IRS 1099 tax forms to certain
individuals but did not report those individuals’ wages to the Department.
Although Famularo’s owner disputed the status of these individuals, he
acknowledged that Famularo hired them and paid them for their services.
Contrary to Famularo’s argument, the Deparetment need only show that the
individuals received remuneration in exchange for their services. Electrolux,
705 A.2d at 1359-60. Based on the testimony of the Deparment witness and Famularo’s owner, the
court agreed that the e Department met
its burden. Although the burden then shifted to Famularo, Famularo failed to
argue that it met both elements under section 4(l)(2)(B) of the Law. Therefore, the Department properly concluded
that the individuals at issue were engaged in “employment” under section 4(l)(2)(B)
of the Law.
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