N. Deenis v. UCBR

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Nicholas Deenis, :
Petitioner :
:
v. : No. 475 C.D. 2019
: ARGUED: June 9, 2020
Unemployment Compensation Board :
of Review, :
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ELLEN CEISLER, Judge (P.)
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE LEADBETTER FILED: October 26, 2020
Nicholas Deenis, Claimant, petitions for review of an order of the
Unemployment Compensation Board of Review that affirmed the referee’s decision
finding him to be an independent contractor and, therefore, ineligible for
unemployment compensation benefits under Section 402(h) of the Unemployment
Compensation Law (Law).1 While the Board’s conclusion was in accordance with
the law at the time of its adjudication, our Supreme Court has established new
standards for evaluating whether a claimant is customarily engaged in an
independently established trade, occupation, or business. A Special Touch v. Dep’t
of Labor & Indus., Office of Unemployment Comp. Tax Servs., 228 A.3d 489 (Pa.
2020). Accordingly, we vacate and remand for further consideration by the Board.
1
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(h).
Following a hearing at which both parties testified and presented
documentary evidence, the referee rendered the following findings of fact:
1. The alleged employer engaged the [C]laimant, a
licensed attorney, to perform work under an open-ended
contract in the area of banking litigation, something for
which his expertise was necessary.
2. At the time his services were engaged, the
[C]laimant signed a three-page agreement, “Contract and
Per Diem Legal Services Agreement” [Agreement], which
states, “The client will not treat attorney as an employee
for any purpose.”
3. The alleged employer secured the [C]laimant’s
services through having found his resume online.
4. The [C]laimant was not required to work at any
facility of the alleged employer and the locations at which
he worked varied.
5. No training was provided to the [C]laimant to
perform this service.
6. The [C]laimant’s work was not supervised.
7. The alleged employer did not provide equipment
or supplies to the [C]laimant.
8. The [C]laimant set the work hours.
9. The rate of compensation was determined by the
parties through negotiation.
10. No taxes were withheld from the [C]laimant’s
remuneration nor were any of his expenses paid.
11. The [C]laimant was free to perform this type of
work for others.
12. The [C]laimant performed the service from July
13, 2018, through July 27, 2018, at which point the alleged
employer terminated the contact.
2
13. The total amount of compensation received by
the [C]laimant within the period that he provided services
was $1,587.50.
(Findings of Fact “F.F.” Nos. 1-13.)
Based on the above findings, the referee concluded that Claimant was
an independent contractor.2 The Board affirmed, stating that it considered the entire
record and determined that the referee’s decision was proper. Thus, it adopted and
incorporated the referee’s findings of fact and conclusions of law.3
On appeal to this Court, Claimant filed a one-paragraph petition for
review asserting that the Board’s “determination that the Referee’s decision was
‘proper under the Pennsylvania Unemployment Compensation Law’ was erroneous”
and that “based on the evidence of record, and the additional evidence to be
presented to the Court,” Juris Client, LLC (Juris) was his employer.4 (Apr. 22, 2019,
Pet. for Review at 1.) However, Claimant misapprehends the scope of the appellate
process in erroneously asserting that he should have the opportunity to present
additional evidence to this Court with respect to the correct identity of his presumed
employer.5 In any case, there is neither merit nor relevance to Claimant’s assertion
2
The determination of self-employment is not a finding of fact, but a legal conclusion based
on the facts of each case. McKean v. Unemployment Comp. Bd. of Review, 94 A.3d 1110, 1112
(Pa. Cmwlth. 2014).
3
The Board is the ultimate finder of fact, “empowered to resolve conflicts in evidence, to
determine the credibility of witnesses, and to determine what weight to accord evidence.” Oliver
v. Unemployment Comp. Bd. of Review, 5 A.3d 432, 438 (Pa. Cmwlth. 2010). This Court may not
reweigh the evidence. Id.
4
In July 2019, this Court denied the Board’s application to quash Claimant’s appeal as
untimely filed. In support, we referenced a copy of a cancelled United States Postal Service form
3817 showing the mailing date of the appeal.
5
Within fifteen days following the Board’s decision, an aggrieved party may request that the
Board reconsider its decision. 34 Pa. Code § 101.111. At that time, the aggrieved party may
(Footnote continued on next page…)
3
that the referee incorrectly identified the presumed employer.6 If one is an employee
he will be entitled to benefits no matter who employed him (although, of course, that
request an opportunity to offer additional evidence at another hearing. The Board will grant
reconsideration only under very limited circumstances and, generally, it will not accept additional
evidence that the litigant could have presented at an earlier stage. Dep’t of Auditor Gen. v.
Unemployment Comp. Bd. of Review, 484 A.2d 829, 830 (Pa. Cmwlth. 1984).
Here, Claimant did not file for reconsideration. Thus, he missed the opportunity, however
remote, to present additional evidence to the only decision-making body with authority to accept
and to consider it. This Court exercises only appellate jurisdiction in these matters. Our review is
limited to determining whether constitutional rights were violated, whether an error of law was
committed, whether a practice or procedure of the Board was not followed, or whether there is
substantial evidence in the record to support the findings of fact. Pasour v. Unemployment Comp.
Bd. of Review, 54 A.3d 134, 137 n.3 (Pa. Cmwlth. 2012). Where we consider the legal question
of whether a claimant was an employee or an independent contractor, we exercise plenary review.
Id.
6
Claimant argues that the Board should have considered his argument that Juris, as the entity
that provided his workspace and paid him, was his employer. Asserting that Helm was just a front
for Juris, Claimant maintains that the Board erred in basing its decision on the Agreement that he
signed with Helm. However, the record reflects that Claimant listed Helm as his last employer
and Paul Stewart as owner thereof in documents pertaining to Claimant’s unemployment
compensation application. (Certified Record “C.R.,” Item No. 2, Claimant Questionnaire;
PACFiled Record “P.R.” at 10.) Additionally, Mr. Stewart identified himself as the owner of Helm
and presented the Agreement between Helm and Claimant. (Id., Item No. 8, Employer’s Exhibit
No. 1; P.R. at 72.)
While it is true that Claimant sometimes worked at Juris’s offices and his bank statement
indicated a direct deposit from “Corporate ACH [(automated clearing house)] Suppliers Juris
Client LLC,” these factors did not render Juris Claimant’s presumed employer. (Id., Claimant’s
Exhibit No. 1; P.R. at 102.) Mr. Stewart testified that Juris was one of his other businesses and
that Claimant occasionally worked there for the sake of their mutual convenience. There were
workstations available at Juris’s offices, located one block from a suburban train stop. (Notes of
Testimony “N.T.” at 7 and 10; P.R. at 57 and 60.)
Moreover, as part of Mr. Stewart’s efforts to ascertain why Claimant did not list Juris as his
employer in his application and whether Claimant believed that Juris owed him any money, the
following colloquy took place with respect to the significance of having Juris on Claimant’s bank
statement:
C [Claimant:] I don’t know the relationship of your entities. All I
know is Juris Client LLC paid me, and all I know is I demanded
(Footnote continued on next page…)
4
determination matters to the putative employer) and if the claimant is an independent
contractor, it makes no difference at all to what entity/ies he provides services.
Obviously, the dispositive issue here is whether the Board erred in
determining that Claimant was an independent contractor. Section 402(h) of the
Law provides in relevant part that a person is ineligible for unemployment
compensation in any week in which he is “engaged in self-employment.” 43 P.S. §
802(h). Self-employment is not a defined term under the Law. Thus, courts look to
the definition of “employment” set forth in Section 4(l)(2)(B) of the Law, 43 P.S. §
753(l)(2)(B), which provides in relevant 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-
payment, and I got paid the exact amount of money that I submitted
. . . on the system that you provided . . . .
E [Employer/Mr. Stewart:] My question is do you have a
relationship with Juris Client?
C [Claimant:] I don’t know what the relationship is between Helm,
Juris Client, and how it came to be that Juris Client LLC paid me.
If you want to explain how it is that Juris Client and Helm decided
to have Juris Client send an ACH to my bank, you’re free to do that
....
....
C [Claimant:] Listen, the only thing I can tell you is Legal Helm can
have anybody pay me. You could have paid me. Paul Stewart could
have paid me, so . . . .
(N.T. at 19-20; P.R. at 69-70) (emphasis added).
As Claimant opined at the hearing, the identity of the payor is irrelevant in this case. There is
no real dispute that Claimant performed services for Helm and/or Mr. Stewart such that the
Agreement had to include Juris in order to be valid. Additionally, at the time that Claimant
executed the unemployment compensation application documents, he knew that he occasionally
had worked at Juris’s offices and that Juris appeared on his bank statement. Nonetheless, he listed
Helm as his employer.
5
-(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 Court has consistently held that, before an individual will be
declared to be self-employed, both elements of Section 4(l)(2)(B) must be satisfied.
Silver v. Unemployment Comp. Bd. of Review, 34 A.3d 893, 896 (Pa. Cmwlth. 2011).
Pursuant to the two-prong test, the Court first examines the degree of control or
direction over the work performed, and second, whether the individual is
customarily engaged in an independently established trade, occupation, profession,
or business. Jia v. Unemployment Comp. Bd. of Review, 55 A.3d 545, 548 (Pa.
Cmwlth. 2012). An alleged employer asserting that an individual is not eligible for
benefits because that person is self-employed bears the burden of proof. C E Credits
OnLine v. Unemployment Comp. Bd. of Review, 946 A.2d 1162, 1167 (Pa. Cmwlth.
2008). There is a presumption that someone receiving wages is an employee and
the alleged employer bears a heavy burden to rebut the presumption. Jia, 55 A.3d
at 548.
With respect to the “direction and control” prong of the independent
contractor test, no single factor is controlling and the ultimate conclusion must be
based on the totality of the circumstances. Pasour v. Unemployment Comp. Bd. of
Review, 54 A.3d 134, 138 (Pa. Cmwlth. 2012). In reviewing this prong, we have
considered factors such as whether there was a fixed rate of remuneration; taxes were
withheld; the employer provided the tools or training to perform the job; the
employer set the time and location of work; and the employer could review the
claimant’s performance. C E Credits OnLine, 946 A.2d at 1168.
6
In the present case, the findings of fact on the first prong were that
Claimant negotiated his compensation and that the alleged employer did not
withhold taxes. (F.F. Nos. 9 and 10.) In addition, the alleged employer did not
supervise Claimant; provide him with training, equipment, or supplies; or restrict
where or when he worked. (F.F. Nos. 4-8.) Accordingly, it is beyond dispute that
Helm established that Claimant was not under its direction and control. (Dec. 14,
2018, Hearing, Notes of Testimony “N.T.” at 4-8 and 16; PACFiled Record “P.R.”
at 54-58.)
It is with regard to the second prong, which requires the presumed
employer to establish that an individual is customarily engaged in an independently
established trade, occupation, profession, or business, that the result is not so clear.
With respect to this determination, we have considered factors such as the
negotiation of different rates, variable compensation, and responsibility for one’s
taxes, Attorneys On Call v. Unemployment Compensation Board of Review, 624
A.2d 754, 756-57 (Pa. Cmwlth. 1993), as well as the submission of invoices for
services rendered, C E Credits OnLine, 946 A.2d at 1168. This Court has also held
that an independent contractor agreement is not determinative of a claimant’s status
but is nonetheless an important factor to consider. Hartman v. Unemployment
Comp. Bd. of Review, 39 A.3d 507, 511-12 (Pa. Cmwlth. 2012). Historically, we
have also placed great significance on whether the claimant was permitted or able
to perform “the activities in question to [any others] who wished to avail themselves
of the services.” Resource Staffing, Inc. v. Unemployment Comp. Bd. of Review, 995
A.2d 887, 892 (Pa. Cmwlth. 2010). However, the Pennsylvania Supreme Court
recently held that “the phrase ‘customarily engaged’ requires that an individual
actually be involved, as opposed to merely having the ability to be involved, in an
7
independently established trade, occupation, profession, or business[.]” A Special
Touch, 228 A.3d at 505-06. Such a determination is fact dependent. Id. at 505. In
other words, it appears that a claimant must actually provide services for others, or
at least make plans or some attempt to do so.
Here, the supported findings of fact were that Claimant signed the
Agreement providing that the client would not treat him as an employee for any
purpose.7 (F.F. Nos. 2 and 11.) The Agreement also provided for different rates of
compensation for different tasks,8 renegotiation of the agreed-upon rate if the
parameters of the work changed, submission of invoices for work completed,9 and,
significantly, a provision that he could work for others.10 These findings clearly
The Board rejected Claimant’s assertion that he was unaware that he was signing an
7
independent contractor agreement, reasoning that “an individual with the claimant’s legal expertise
and obvious intellect would know that his services were being engaged as an independent
contractor.” (Board’s Decision at 2.)
8
The three rates of compensation included: (1) legal research and writing, discovery
documents, and document review ($25/hour); (2) pleadings, court filings, motions, and supporting
briefs; for court appearances, oral arguments, and client meetings ($50/hour); and (3) joint
representation work product ($100/hour). (C.R., Item No. 8, Employer’s Exhibit No. 1 at 2; P.R.
at 73.)
9
The “Payment for Work” provision stated:
Attorney shall submit all assignments on a timely basis. Each
assignment shall have an approved budget from which Attorney will
submit request for progress payments based on completed tasks and
assignments and for final payment upon completion and acceptance
by Client. Attorney shall post hours and work into the on line [sic]
accounting system for time tracking including posting work against
the proper client matter. Client shall review each submitted request
for payment. Client shall make payment within 14 days of receipt
of payment request.
(Id.)
10
(N.T. at 7; P.R. at 57.) Here, the record is devoid of evidence that Claimant was holding
himself out to do legal work for other clients while working for Helm.
8
would have established that Claimant was self-employed under the controlling case
law at the time of the referee’s hearing and the Board’s decision. However, the
criteria for independent contractor status has been modified in relevant part by our
Supreme Court’s holding in A Special Touch but, because that case had not yet been
decided, the Board had no opportunity to consider Claimant’s case under the new
standard. Accordingly, we will remand so that the Board can do so.11
_____________________________________
BONNIE BRIGANCE LEADBETTER,
Senior Judge
11
This Court’s recent decision in Silver v. Unemployment Compensation Board of Review
(Pa. Cmwlth., No. 1206 C.D. 2019, filed July 7, 2020), petition for allowance of appeal filed (Pa.,
No. 207 EAL 2020, July 8, 2020), is not to the contrary. As we pointed out in Silver, there was a
myriad of factors establishing that the claimant was engaged in an independent trade or business,
most notably that she was not only capable of working for others, but was in fact providing
arbitration services to multiple companies.
9
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Nicholas Deenis, :
Petitioner :
:
v. : No. 475 C.D. 2019
:
Unemployment Compensation Board :
of Review, :
Respondent :
ORDER
AND NOW, this 26th day of October, 2020, the order of the
Unemployment Compensation Board of Review is hereby VACATED, and the
matter is REMANDED to the Board for reconsideration of this case under the
standard established in A Special Touch v. Department of Labor and Industry, Office
of Unemployment Compensation Tax Services, 228 A.3d 489 (Pa. 2020).
Jurisdiction relinquished.
_____________________________________
BONNIE BRIGANCE LEADBETTER,
Senior Judge