Farinhas Logistics, LLC v. UCBR ( 2016 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Farinhas Logistics, LLC, :
Petitioner :
: No. 1694 C.D. 2015
v. :
: Submitted: March 4, 2016
Unemployment Compensation Board :
of Review, :
Respondent :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McCULLOUGH FILED: December 5, 2016
Farinhas Logistics, LLC (Putative Employer) petitions for review of the
August 13, 2015 order of the Unemployment Compensation Board of Review
(Board), which reversed a referee’s decision, finding that Eliseos A. Anenoglou
(Claimant) was eligible for unemployment compensation benefits pursuant to
sections 401(a), 404, and 4(l)(2)(B) of the Unemployment Compensation Law
(Law).1 For the following reasons, we vacate and remand.
1
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S.
§§801(a), 804, 753(l)(2)(B).
Facts and Procedural History
The primary question in this case involves whether Claimant was an
employee or an independent contractor. Claimant performed services for Putative
Employer as a sales agent from August 13, 2013, to May 24, 2014. (R.R. at 27a;
Board’s Finding of Fact at No. 21.) After learning that he was fired, Claimant filed
an application for benefits with the local service center, which found that Claimant
had base year wages of $200.00 paid by a company called Randstad; thus, the service
center determined that Claimant did not financially qualify for benefits under sections
401(a) and 404 of the Law.2 Claimant appealed, contending that the wages received
from Putative Employer should be included as base year wages. On January 29,
2015, a referee held a hearing, at which Claimant appeared and an agency
representative participated by telephone. (R.R. at 17a-19a.)
Claimant testified that he worked for Putative Employer from
approximately August of 2013 to July of 2014. Claimant further testified that he
entered into a confidentiality, non-competition, and non-solicitation agreement
(Agreement)3 with Putative Employer, which identified him as an independent
contractor. According to Claimant, the Agreement prohibited him from employment
in a similar job for at least one year after his employment ended. Claimant related
2
Section 401(a) of the Law provides that compensation shall be payable to any employee
who is or becomes unemployed, and who has, within his base year, been paid wages for
employment as required by section 404(c) of the Law, which sets forth the financial eligibility
requirements for securing compensation. 43 P.S. §§801(a), 804(c).
3
The July 27, 2013 Agreement was between Claimant and “Jorge Farinhas, Independent
Sales Agent for Landstar, in his capacity as owner and operator of the independent sales agency, the
names and business identity of which may change over time.” (R.R. at 102a.) Claimant and
Farinhas executed the Agreement. (R.R. at 103a.)
2
that he was referred to and treated as an employee except when problems arose, when
he was then called an independent contractor. Claimant testified that near the end of
his employment, business slowed and became so bad that he was no longer making
money; around the same time, as he placed calls to his customers, they informed
Claimant that he had been fired. Claimant stated that it was at a later date that
Putative Employer informed Claimant that he was terminated. Claimant submitted
documents detailing the commissions he earned from Putative Employer.4 Further,
he submitted his income tax returns and stated that he paid taxes on the income
received from Putative Employer. Additionally, Claimant stated he only worked for
Putative Employer during his base year. (R.R. at 27a-31a.)
Andrea Novak (Novak), tax agent, stated that Claimant’s documents
indicated that a company called Landstar provided the commissions and did not
identify Claimant as the recipient of those commissions. Further, Novak stated that
Claimant reported no income on his tax returns from either Landstar or Putative
Employer.5 (R.R. at 24a, 32a.)
By decision and order dated January 29, 2015, the referee affirmed the
local service center’s determination denying Claimant benefits. The referee found, in
relevant part:
4. The claimant asserts he was employed by [Putative
Employer] from August 2013 until July 2014.
4
The documents were titled “Agent Commission Statements” and identified Landstar
Ranger, Inc. (Landstar) as the agent providing the commissions and Putative Employer as the
contractor receiving the commissions.
5
The income reported on Claimant’s tax returns was consistent with the commission
amounts shown on the statements but Claimant was paid by and issued 1099s from Ryan Huber as
to that income. (R.R. at 47a-106a.)
3
5. The claimant submitted commission/incentive detail
reports from this time of employment.
6. The reports do not have any identification information
pertaining to the claimant or with the amount of gross
wages received for any type [of] work performed.
(Referee’s Findings of Fact Nos. 4-6.) The referee indicated that although Claimant
testified to base year employment, he was unable to provide any corroborating
credible documentation to establish earnings from this employment. (Referee’s
decision at 2.) Without such evidence, the referee determined, Claimant did not meet
his burden to show eligibility for benefits. Id.
On January 30, 2015, Putative Employer called the referee’s office
claiming insufficient notice of the hearing. The report of the telephone call noted:
“Jorge Farinhas called to say he was not the employer in this appeal. [H]e just
received his hearing [notice] the day of the hearing after the hearing was held. He
said the claimant’s employer was Landstar Ranger Inc. not Farinhas Logistics. He is
an independent Sales Agent for Landstar only.” (Original Record, Item No. 11.)
Additionally, on February 3, 2015, the referee’s January 29, 2015 decision was
appealed by Claimant. On February 27, 2015, Claimant submitted additional
information regarding his appeal, i.e., two 2014 1099 forms (one from Ryan Huber
and one from Keep On Trucking, LLC), which, he asserted, connected the pay stubs
(agent commission statements) to his tax records. (Original Record, Item No. 13.)
By order dated May 8, 2015, the Board remanded to the referee for
further hearing. Specifically, the Board stated:
The purpose of this hearing is to allow a representative from
[Putative Employer] the opportunity to present testimony
and evidence on the issue of whether or not the claimant
4
was an employee or was an independent contractor
under Section 4(l)(2)(B) of the Law[6] when he
performed services for [Putative Employer]. [Putative
Employer] clearly was not given sufficient notice of the
January 29, 2015, hearing as the notice was mailed to it on
January 27, 2015.
(Board’s order dated May 8, 2015) (emphasis in original). Importantly, the Board’s
order also provided that “[t]he scope of further hearings shall be governed by any
memorandum of the Board’s legal staff which accompanies the Notice of Hearing.”
Id.
The Board’s legal staff’s memorandum, dated May 6, 2015, requested
the referee to schedule an additional hearing for the purpose identified in the Board’s
order. However, the remand memo went on to provide, in pertinent part:
Answers to the following questions, in addition to the
above information, would be helpful:
7. Can the Referee elicit from the parties detailed testimony
explaining the relationship between them in the context
of the two prong independent contractor test under
Section 4(l)(2)(B) of the Law?
8. Can the parties provide precise information concerning
the moneys paid to the claimant by [Putative Employer]
during the claimant’s base year of August 1, 2013,
through July 31, 2014?
6
Section 4(l)(2)(B) provides that an individual performing services is presumed to be an
employee unless the employer satisfies a two-prong test to show that the individual was an
independent contractor. 43 P.S. §753(l)(2)(B).
5
9. Do the numerous stubs already placed in the record
reflect payments to the claimant for his services for
[Putative Employer]?
(Original Record, Item No. 14) (emphasis in original).
A remand hearing was subsequently held on May 27, 2015, at which
Putative Employer’s owner, Jorge Farinhas (Farinhas), and Putative Employer’s
witness, Ryan Huber (Huber), appeared and offered testimony. The Claimant,
however, did not appear at this hearing. (R.R. at 5a, 10a-11a, 13a, 33a-34a.)
Huber testified that approximately 1,000 agencies work for a trucking
company called Landstar, which has a fleet of 9,200 trucks. Huber stated that
Putative Employer was one such agency, and Putative Employer had a contract with
Landstar to provide services as an independent sales agent. Huber asserted that he
was an independent sales agent for Putative Employer, and that Claimant was an
independent contractor for Huber, rather than Putative Employer. Huber indicated
that he entered into an agreement with Claimant, and submitted the Agreement
identifying its parties as Claimant and Putative Employer. According to Huber, the
Agreement was really between Claimant and Huber but, in error, he neglected to
change the wording of the Agreement to reflect the same. (R.R. at 36a-39a, 44a.)
Huber confirmed that he and Claimant had the same duties as sales
agents. Their job was to find customers that needed freight moved and connect them
with Landstar trucks to transport the freight. In order to move the freight, Huber
explained that sales agents and Landstar’s drivers used a load board on Landstar’s
website. Sales agents were responsible for posting customers’ freight on the load
board, and then Landstar’s drivers looked to the load board to book loads. The sales
agent earned a commission when a load was booked. (R.R. at 36a-37a, 39a-41a.)
6
Huber acknowledged that he provided training to Claimant on how to
find customers and how to use Landstar’s website over the phone and computer with
voiceover instant messenger. After such training, Huber noted that Claimant went on
to develop his own customer relationships and business. According to Huber,
Claimant was completely independent as to how the work was performed. Further,
he stated that Claimant could determine the hours worked, was not required to
complete a timesheet, and did not have any monetary or other deadlines.
Additionally, Huber indicated that Claimant was prohibited under the Agreement
from working with other agencies or brokerage firms for six months after
employment ended. (R.R. at 40a-41a.)
As to Claimant’s commissions, Huber stated that the percentage of
commissions was not negotiated and explained:
[I]t’s basically not negotiated at all. it’s [sic] – we have our
set practice of how we bring on new agents, and [Claimant]
got the percentage that we basically, as – [Farinhas] is
agency owner and myself, as the business partner, discussed
what we’re going to bring agents on at, and that’s the
percentage we gave him.
(R.R. at 40a.) Huber testified that he, and not Putative Employer, paid Claimant,
payment was made to Claimant by checks for specific amounts, and he did not give
Claimant pay stubs. All checks were written out of Huber’s personal account, except
for the last check which was from Huber’s recently-established business account
(“Keep On Trucking, LLC”). Huber issued Claimant 1099s and used his social
security number to reflect the payments made out of his personal account. One 1099
was issued to Claimant from his business and utilized its EIN number. Checks were
issued to Claimant based upon the information contained in the commission
statements, which were released by Landstar on a weekly basis. Huber testified that
7
the commission statements reflected the commissions earned and the loads upon
which Claimant was paid, but stated that they did not evidence actual payment. In
addition to the Agreement, Huber submitted copies of 1099s issued to Claimant and
images of checks paid to Claimant for commissions. (R.R. at 27a, 39a, 42a-44a,
102a-151a.)
Putative Employer, through Farinhas, testified that Claimant was never
an employee of Putative Employer. Rather, Putative Employer asserted that Claimant
was a subcontractor for Huber. Putative Employer stated that it never issued a check
to Claimant and that Huber made all payments to Claimant. Putative Employer
explained that it is identified at the top of the commission statements as owner of the
agency and reiterated that the commission statements did not evidence payment to
Claimant; however, Putative Employer acknowledged that the statements gave
Claimant a general idea of what amounts he would be paid. Putative Employer also
presented the Agreement. (R.R. at 44a-45a.)
By decision and order dated August 13, 2015, the Board reversed the
decision of the referee. Based upon the evidence presented at both hearings, the
Board made the following factual findings:
1. On December 5, 2014 the [C]laimant filed an
application for benefits dated November 30, 2014
establishing a base year from July 1, 2013 through June
30, 2014.
2. During the [C]laimant’s base year he received $200.00
in wages in the 3rd quarter of 2013, working for a
company call Randstad.
3. During the [C]laimant’s base year he also entered into a
relationship with [Putative Employer] wherein he
agreed to perform services as a sales agent.
8
4. [Putative Employer] is an independent sales agency and
has a contract with a transportation company called
Landstar Global Logistics (Landstar).
5. Landstar has a fleet of thousands of individual truck
drivers who own and operate their own trucks.
6. [Putative Employer] has contracted with Landstar to
find customers that need freight transported for
Landstar’s drivers.
7. Landstar has a website to facilitate linking the drivers
with the freight customers obtained by the sales
agencies like [Putative Employer].
8. Drivers book their loads from the Landstar website
called the load board.
9. The [C]laimant had access to Landstar’s website
because of his association with [Putative Employer].
10. The [C]laimant signed a Confidentiality, Non-Compete
and Non-Solicitation agreement on July 23, 2013 with
[Putative Employer].
11. The [C]laimant was paid by commission.
12. The amount of commission paid was a set rate
established by [Putative Employer] and there was no
negotiation.
13. No taxes were withheld and the [C]laimant received a
1099 for tax purposes.
14. The [C]laimant worked from home using his own
computer, had no set hours and was not required to
submit a timesheet.
9
15. The [C]laimant received training from [Putative
Employer] on how to use Landstar’s website as well as
training on how to solicit customers.
16. The [C]laimant was prohibited from working for other
sales agencies or other brokerage firms that compete
with [Putative Employer].
(Board’s Findings of Fact Nos. 1-16.)
The Board found that Claimant last performed services for Putative
Employer on May 24, 2014, and received commissions while performing services for
Putative Employer, as follows: $1,023.91 (3rd quarter of 2013), $3,686.75 (4th quarter
of 2013), $3,430.89 (1st quarter of 2014), and $4,895.54 (2nd quarter of 2014). The
Board determined that Claimant had more than 26 credit weeks in his base year, with
total base year wages of $13,237.00. (Board’s Findings of Fact at Nos. 17-22.)
Examining the status of Claimant’s relationship with Putative Employer
under the two-pronged test set forth in section 4(l)(2)(b) of the Law, the Board
concluded that Putative Employer failed to satisfy either prong of the test to show that
Claimant was an independent contractor. As to the first prong of the test relating to
control, the Board stated:
[T]he Board notes that no taxes were withheld and that the
claimant received a 1099 for tax purposes. Moreover, the
claimant worked from home on his own computer and was
free to set his own hours. The website, however, which
connected the claimant to the drivers belonged to Landstar
and the claimant could only access it because of his
association with [Putative Employer]. Also, the claimant
was provided training on how to operate the website as well
as training on how to solicit customers for business.
Finally, there was no negotiation regarding the claimant’s
rate of pay. Under these circumstances the Board concludes
that the claimant was not free from the direction and control
of [Putative Employer].
10
(Board’s decision at 3.) Regarding the second prong, the Board concluded that
Claimant was not customarily engaged in an independently established business,
trade, or profession, and reasoned:
Again, the website which connected the claimant to the
drivers belonged to Landstar and the claimant could only
access it because of his association with [Putative
Employer]. Moreover, the claimant was specifically
prohibited from working for other sales agencies or other
brokerage firms that competed with [Putative Employer].
Thus, he was not free to provide his services as a sales
agent to anyone who wished to avail themselves of such
services.
Id. at 3-4. Hence, the Board determined that Claimant’s services for Putative
Employer were not excluded from covered employment under section 4(l)(2)(B) of
the Law, and that Claimant was eligible for benefits under sections 401(a), 404, and
4(l)(2)(B).
Putative Employer filed a request for reconsideration of the Board’s
decision, which was denied by order of the Board dated September 16, 2015, and
Putative Employer appealed.
On appeal,7 Putative Employer maintains that the Board erred in
determining that Claimant was an employee, rather than an independent contractor,
because it satisfied both prongs of section 4(l)(2)(B). Within this argument, Putative
Employer alleges that Findings of Fact Nos. 9 and 15 are not supported by substantial
7
Our review is limited to determining whether constitutional rights were violated, whether
errors of law were committed, or whether necessary findings of fact were supported by substantial
evidence. Section 704 of the Administrative Agency Law, 2 Pa.C.S. §704; Staffmore, LLC v.
Unemployment Compensation Board of Review, 92 A.3d 844, 847 (Pa. Cmwlth. 2014).
11
evidence. In response, the Board contends that substantial evidence supports its
findings and that Putative Employer satisfied neither prong of the test. According to
the Board, it properly determined that Claimant was not excluded from covered
employment under section 4(l)(2)(B) and, therefore, appropriately included
Claimant’s wages from Putative Employer in his base year wage calculations under
sections 401(a) and 404 of the Law.8
Discussion
Initially, we note that the Board is the ultimate factfinder in
unemployment compensation proceedings; therefore, it is “solely for the [Board] to
assess credibility[,] to resolve conflicts in the evidence ... [and] to determine what
weight to give to any evidence.” Mulberry Market, Inc. v. City of Philadelphia,
Board of License & Inspection Review, 735 A.2d 761, 767 (Pa. Cmwlth. 1999).
Further, the Board’s findings are conclusive on appeal where the record, taken as a
whole, contains substantial evidence to support its findings. Oliver v. Unemployment
Compensation Board of Review, 5 A.3d 432, 438-39 (Pa. Cmwlth. 2010). Thus, our
8
Claimant, acting pro se, filed a notice of intervention and submitted a brief on appeal.
Putative Employer filed an application for relief requesting that Claimant’s brief be stricken because
it is replete with factual matters not contained in the record below and Claimant’s legal arguments
are premised upon this mischaracterization of the evidentiary record. By order dated February 18,
2016, we directed that this issue be resolved with the merits. Upon review, we agree with Putative
Employer that Claimant’s brief is permeated by factual references that are not part of the record or
testimony below. It is well-established that our review is limited to the existing record. See
Pa.R.A.P. 1551(a); Tener v. Unemployment Compensation Board of Review, 568 A.2d 733, 738 (Pa.
Cmwlth. 1990) (reasoning that this Court’s appellate review is restricted to those facts certified in
the record). Pa.R.A.P. 2101 provides that “[b]riefs and reproduced records shall conform in all
material respects with the requirements of these rules as nearly as the circumstances of the
particular case will admit, otherwise they may be suppressed.” Accordingly, we grant Putative
Employer’s application for relief and strike Claimant’s brief.
12
substantial evidence review is limited to determining whether there is relevant
evidence in the record upon which a reasonable mind could base a conclusion,
viewing the evidence in the light most favorable to Claimant, as the prevailing party,
and giving him the benefit of all logical and reasonable inferences that can be drawn
from the evidence. Clark v. Unemployment Compensation Board of Review, 129
A.3d 1272, 1275 (Pa. Cmwlth. 2015).
Although the record may contain evidence supporting a finding contrary
to that made by the Board, our review is limited to whether the factual findings of the
Board are supported by substantial evidence. Stage Road Poultry Catchers v.
Commonwealth, Department of Labor and Industry, Office of Unemployment
Compensation, Tax Services, 34 A.3d 876, 885-86 (Pa. Cmwlth. 2011); accord
Mulberry Market, Inc., 735 A.2d at 767 (“[T]he pertinent inquiry is whether there is
any evidence which supports the factfinder’s factual finding.”). Moreover, “[t]he fact
that [a party] may have produced witnesses who gave a different version of the
events, or that [the party] might view the testimony differently than the Board, is not
grounds for reversal if substantial evidence supports the Board's findings.” Tapco,
Inc. v. Unemployment Compensation Board of Review, 650 A.2d 1106, 1108-09 (Pa.
Cmwlth. 1994).
Putative Employer contends that the Board erred in determining that
Claimant was an employee because it established both prongs of the independent
contractor test under section 4(l)(2)(B) of the Law. Additionally, Putative Employer
argues that three of the Board’s findings, Findings of Fact Nos. 3, 9, and 15, are not
supported by substantial evidence.
13
Employment Relationship
To be eligible for unemployment benefits, a claimant must show that his
wages were earned from employment. 43 P.S. §§801(a), 753(x).9 Further, section
402(h) of the Law provides that an employee is ineligible for compensation for any
week in which he is engaged in self-employment. 43 P.S. §802(h). Although “self-
employment” is not defined, we examine the parties’ working relationship under
section 4(l)(2)(B) of the Law,10 the purpose of which is to exclude independent
contractors from coverage. Beacon Flag Car Company, Inc. (Doris Weyant) v.
Unemployment Compensation Board of Review, 910 A.2d 103, 107 (Pa. Cmwlth.
2006).
To show that a claimant is a self-employed independent contractor, the
employer must satisfy the two-pronged test set forth in section 4(l)(2)(B), which
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 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.
9
A claimant’s base year wages must have been paid for employment. 43 P.S. §801(a). In
addition, “wages” is 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) (emphasis added).
10
Whether an employer/employee relationship exists is a question of law that depends upon
the unique facts of each case. Clark, 129 A.3d at 1276. Therefore, our scope of review is plenary,
and our standard of review is de novo. Quality Care Options v. Unemployment Compensation
Board of Review, 57 A.3d 655, 660 (Pa. Cmwlth. 2012).
14
43 P.S. §753(l)(2)(B). This section creates a strong presumption that an individual
rendering services for wages is an employee. Kurbatov v. Department of Labor and
Industry, Office of Unemployment Compensation, Tax Services, 29 A.3d 66, 69 (Pa.
Cmwlth. 2011). To overcome this presumption, the employer has the burden of
demonstrating that the claimant “is not subject to the employer’s control and he is
engaged in an independently established trade.” Frimet v. Unemployment
Compensation Board of Review, 78 A.3d 21, 25 (Pa. Cmwlth. 2013). Both prongs
under section 4(l)(2)(B) must be satisfied for a claimant to be self-employed under
the Law; otherwise, the presumption of employment stands. Silver v. Unemployment
Compensation Board of Review, 34 A.3d 893, 896 (Pa. Cmwlth. 2011).
In determining the existence of an employer/employee relationship, the
court is required to examine the actual relationship of the parties. Hartman v.
Unemployment Compensation Board of Review, 39 A.3d 507, 511-12 (Pa. Cmwlth.
2012). We noted that the terminology used by the parties to describe their
relationship is not dispositive, id., and even a declaration in a contract stating that the
claimant is an independent contractor may not necessarily satisfy the independent
contractor test of section 4(l)(2)(B), Clark, 129 A.3d at 1277 n.11. Moreover,
although the existence of a non-compete agreement is not determinative of the issue,
the terms of the parties’ agreement must be considered. Kurbatov, 29 A.3d at 72.
Two-Prong Test
As noted above, Putative Employer must show that Claimant has been,
and will continue to be, free from control or direction over the performance of such
services. 43 P.S. §753(l)(2)(B)(a). In analyzing this first prong of the test, we
consider the following relevant factors:
15
how the claimant was paid; how taxes on the claimant's
earnings were paid; whether the claimant or the person for
whom [he] worked supplied tools or equipment necessary to
perform the services; whether the person for whom
claimant worked provided on-the-job training; whether
claimant was required to attend meetings or report on [his]
work; who set the time and location of the work; whether
the claimant's work was subject to supervision or review;
the terms of any written contract between the parties; the
degree to which the claimant was directed with respect to
the work; and whether the claimant was free to refuse work
assignments without repercussions.
Stauffer v. Unemployment Compensation Board of Review, 74 A.3d 398, 405 (Pa.
Cmwlth. 2013) (emphasis added). Importantly, no single factor is controlling and the
ultimate conclusion pertaining to control must be based on the totality of the
circumstances. Quality Care Options v. Unemployment Compensation Board of
Review, 57 A.3d 655, 660 (Pa. Cmwlth. 2012). Further, because each case is fact-
specific, all of these factors need not be present to determine the type of relationship
that exists. Id. However, “‘[w]hile all of these factors are important indicators, the
key element is whether the alleged employer has the right to control the work to be
done and the manner in which it was performed’ . . . an employer-employee
relationship likely exists not only where the employer actually exercises control, but
also where it possesses the right to do so.” Kurbatov, 29 A.3d at 70 (quoting York
Newspaper Company v. Unemployment Compensation Board of Review, 635 A.2d
251, 253 (Pa. Cmwlth. 1993)) (alteration in original).
As to the second prong of the test, Putative Employer must demonstrate
that “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)(b). To determine whether a claimant is “customarily engaged in an
16
independently established trade, occupation, profession or business,” we look at
whether the claimant was restricted from performing the services for others and
whether anything in the nature of the work limits it to a single employer. Stauffer, 74
A.3d at 407. Evidence that a claimant is engaged in an independent business is an
absolute prerequisite to a determination of self-employment. Quality Care Options,
57 A.3d at 666. As noted by our Supreme Court, “[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 and Industry, 892 A.2d 781, 798 (Pa.
2006).
Therefore, an employer must show that the claimant took positive steps
toward establishing an independent business. Buchanan v. Unemployment
Compensation Board of Review, 581 A.2d 1005, 1008 (Pa. Cmwlth. 1990). Further,
the independent trade established must involve the same type of services that the
claimant provided to the employer, Electrolux Corporation v. Commonwealth,
Department of Labor and Industry, Bureau of Employer Tax Operations, 705 A.2d
1357 (Pa. Cmwlth. 1998), and the claimant must have performed those services for
others, and not just for the employer, Peidong Jia v. Unemployment Compensation
Board of Review, 55 A.3d 545, 548 (Pa. Cmwlth. 2012). We have stressed the
importance of an employer to submit evidence to show that claimant is engaged in an
independent business. See id. at 549 (holding that without evidence that the claimant
established an independent business or performed the same services for others, the
employer could not establish the second prong of the test to overcome the statutory
presumption of employment); see also Clark, 129 A.3d at 1277 (concluding that the
employer failed to satisfy the second prong where there was no evidence that the
17
claimant established a private enterprise or independent business through which he
provided services to others).
Board’s Findings of Fact
Unfortunately, the Board’s decision did not address all of the factual
issues that are essential to a determination of whether Putative Employer satisfied the
independent contractor test of section 4(l)(2)(B) of the Law. Notably, the Board did
not make a finding as to who paid Claimant’s commissions, which is an essential
factor to consider in determining whether Claimant was an independent contractor or
an employee. The Board found only that Claimant was paid commissions “while
performing services for Farinhas Logistics,” (Board’s Findings of Fact Nos. 17-20),
that the rate of commission was non-negotiable and established by Putative
Employer, that no taxes were withheld from Claimant’s wages, and that Claimant
received a 1099 for tax purposes (Board’s Findings of Fact Nos. 11-13).
However, the commission statements in the record reflect that while
commissions were earned from Putative Employer, payment of those commissions
appear to have been made to Claimant by Huber out of his personal bank account
and/or newly established business (“Keep On Trucking, LLC”), and Claimant’s
1099s appear to have been issued by Huber and/or his business. Indeed, Huber’s
testimony at the remand hearing before the referee raises a serious question as to
who, or what entity, paid the commissions and actually employed Claimant. The
Board must address this evidence/testimony in the record and make further findings
regarding the same. Further, although the Board found that training was provided by
Putative Employer, the record indicates that Huber provided training to Claimant, and
18
the Board failed to explain the legal and/or factual basis for its determination that
Claimant received training from Putative Employer.
Although the record contains evidence that would support additional,
necessary findings, it is for the Board, and not this Court, to provide findings of fact
sufficiently specific to reveal the true nature of Claimant’s relationship with Putative
Employer. Resource Staffing, Inc. v. Unemployment Compensation Board of Review,
961 A.2d 261, 265 (Pa. Cmwlth. 2008). In the absence of specific findings of fact
necessary for the examination of the independent contractor test set forth in section
4(l)(2)(B) of the Law, the case must be remanded to the Board. D.K. Abbey
Marketing, Inc. v. Unemployment Compensation Board of Review, 645 A.2d 339, 342
(Pa. Cmwlth. 1994). We note that a remand is consistent with our prior case law.
Osborne Associates, Inc. v. Unemployment Compensation Board of Review, 3 A.3d
722, 733 (Pa. Cmwlth. 2010) (remanding to the Board to make the necessary findings
to determine the claimant’s eligibility for benefits based on the independent
contractor test factors); Resource Staffing, Inc., 961 A.2d at 265 (vacating the Board’s
order and remanding the matter for additional findings where the decision adopted by
the Board did not make adequate findings necessary for applying the independent
contractor test factors); Tri-State Scientific v. Unemployment Compensation Board of
Review, 589 A.2d 305, 308 (Pa. Cmwlth. 1991) (holding that appellate review could
not be exercised where the Board failed to make essential findings on the elements set
forth in section 4(l)(2)(B) of the Law and, thus, the case was required to be remanded
to the Board to make specific findings of fact of the issue of Claimant’s employment
status).
Additionally, the Board failed to make any credibility determinations as
to the testimony of Claimant, Huber, and Putative Employer. It is well-established
19
that it is the Board’s duty and functional purpose to assign credibility and weight
determinations to the evidence presented, Wardlow v. Unemployment Compensation
Board of Review, 387 A.2d 1356, 1357 (Pa. Cmwlth. 1978), without which this Court
cannot perform meaningful appellate review. As we have previously stated:
When . . . the burdened party did present sufficient evidence
as a matter of law and yet failed to prevail below, we then
must determine whether the reason for the adverse
determination stems from the factfinder’s opinion that the
evidence presented was not credible, or, whether instead the
factfinder committed an error of law in applying the proper
principle of law to the facts presented. If the latter, we can
reverse the agency, even if the factfinder has found the
testimony of the burdened party credible, because in such
instance the issue is a matter of law for this Court to
determine. In the former instance, however, the approach is
different because our scope of review precludes us from
making factual findings or credibility determinations.
Moreover, we decline to infer credibility. Thus, we must
scrutinize the adjudication. If specific credibility
determinations appear that support the result of the
adjudication, then we may affirm the decision below on the
basis that the burdened party failed in his burden to
persuade the factfinder. If, however, specific credibility
determinations do not appear in the factual findings, in the
discussion or conclusions, and no other specific explanation
for the adverse determination appears in the adjudication,
then we have no other alternative but to vacate the order
below and remand for specific credibility findings and for
an explanation of the agency's decision; otherwise we could
not perform our appellate review function.
Kirkwood v. Unemployment Compensation Board of Review, 525 A.2d 841, 844 (Pa.
Cmwlth. 1987) (alterations in original).
20
Conclusion
The Board failed to make essential findings of fact on the elements set
forth in section 4(l)(2)(B) of the Law and make credibility determinations to enable
this Court to perform its function of appellate review. Therefore, the matter must be
remanded to the Board to make essential findings and to issue a new decision
containing express credibility determinations and sufficient explanation its decision.
Accordingly, the Board’s order is vacated and the matter is remanded to
the Board, consistent with this memorandum opinion.
________________________________
PATRICIA A. McCULLOUGH, Judge
21
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Farinhas Logistics, LLC, :
Petitioner :
: No. 1694 C.D. 2015
v. :
:
Unemployment Compensation Board :
of Review, :
Respondent :
ORDER
AND NOW, this 5th day of December, 2016, the August 13, 2015
order of the Unemployment Compensation Board of Review (Board) is vacated
and the case is remanded to the Board to make additional findings and issue a new
decision consistent with this memorandum opinion.
The application of Farinhas Logistics, LLC, to strike the brief
submitted by Eliseos A. Anenoglou is granted and the brief is hereby stricken.
Jurisdiction relinquished.
________________________________
PATRICIA A. McCULLOUGH, Judge