The opinion of the court was delivered by: Judge Cohn Jubelirer
Submitted: February 25, 2011
BEFORE: HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES R. KELLEY, Senior Judge
SkyHawke Technologies LLC, (SkyHawke) petitions for review of the
Order of the Unemployment Compensation Board of Review (Board), which
affirmed the Unemployment Compensation Referee‟s (Referee)
determination that Ross A. Gershel (Claimant) was not ineligible for
unemployment compensation (UC) benefits under Sections 402(h) and
4(l)(2)(B) of the Unemployment Compensation Law (Law).*fn1
SkyHawke argues that the Board erred as a matter of
law in finding Claimant eligible for UC benefits because Claimant was
not an employee, but a self-employed, independent contractor and,
therefore, ineligible for UC benefits. For the following reasons, we
reverse the Order of the Board.
Claimant was employed by SkyHawke to perform global positioning satellite (GPS) mapping of golf courses from June 2009 until December 2, 2009. Claimant applied for UC benefits effective December 27, 2009, asserting a lack of work and naming GBI, Inc. (GBI), his former employer, as his employer. (Initial Internet Claim at 1-2, December 30, 2009, R.R. at 1a-2a; Referee‟s Determination, Findings of Fact (FOF) ¶ 1.) The Harrisburg UC Service Center (Service Center) found Claimant eligible for benefits, but concluded that SkyHawke, not GBI, was Claimant‟s employer. (Notice of Determination at 1, R.R. at 12a.) SkyHawke appealed and the matter was assigned to the Referee, who held a hearing at which Claimant and SkyHawke presented evidence. Claimant testified on his own behalf and SkyHawke offered the testimony of Chris Moulds, its manager of the quality control and course mapping department.
Claimant initially indicated that, when he filed for UC benefits, he thought he was filing a claim against GBI, not SkyHawke, and that he believed SkyHawke was appealing the Service Center‟s determination that it was the responsible employer. However, the Referee explained that the issue of which employer was financially liable was not before him because Claimant‟s claim was based on the first four of the last five completed quarters and that was an issue different than the one before him, whether Claimant was eligible for UC benefits. (Hr‟g Tr. at 25, R.R. at 45a.) Claimant testified that SkyHawke paid him a flat rate based on whether he mapped a nine-hole or eighteen-hole golf course. (Hr‟g Tr. at 24, R.R. at 44a; SkyHawke‟s Exh. 9-9c, R.R. at 67a-71a.) Claimant acknowledged that his work was not supervised in any way, he had no reporting times or deadlines, and he understood that he was an independent contractor and not an employee of SkyHawke. (Hr‟g Tr. at 25, 27, R.R. at 45a, 47a.) Indeed, Claimant agreed that SkyHawke "would not exercise control over [Claimant‟s] activities or business operation." (Hr‟g Tr. at 27, R.R. at 47a.)
Mr. Moulds testified that SkyHawke paid Claimant $250 to map an eighteen-hole golf course and $125 for a nine-hole golf course, but did not pay any employee benefits or make tax payments on Claimant‟s behalf. (Hr‟g Tr. at 14, 16, R.R. at 34a, 36a; FOF ¶ 11.) He stated that SkyHawke did not control Claimant‟s day-to-day activities or supervise Claimant while he mapped golf courses, and SkyHawke communicated with Claimant approximately twice per month. (Hr‟g Tr. at 13, R.R. at 33a.) Mr. Moulds indicated that Claimant was free to accept or reject any assignment. (Hr‟g Tr. at 12, R.R. at 32a; FOF ¶ 12.) According to Mr. Moulds, SkyHawke provided Claimant with proprietary software and equipment, which was licensed to SkyHawke, to map the golf courses and a brief training session in Pennsylvania*fn2 with another SkyHawke mapper on how to use the equipment. (Hr‟g Tr. at 20-22, R.R. at 40a-42a; FOF ¶¶ 8-10.) With regard to the cessation of Claimant‟s work in December 2009, Mr. Moulds testified that it was impractical to map golf courses during the winter months because GPS targets are not visible when there is snow on the ground, and many golf courses close and will not allow people on the golf course. (Hr‟g Tr. at 12, R.R. at 32a.) Finally, Mr. Moulds indicated that, if Claimant‟s mapping did not meet SkyHawke‟s quality standards, Claimant was required to re-map the golf course in order to be paid for that particular course. (Hr‟g Tr. at 16-17, R.R. at 36a-37a; FOF ¶ 10.)
In addition to Mr. Moulds‟ testimony, SkyHawke offered the "Skycourse Enablement Agreement" (Agreement), signed by Claimant, in which SkyHawke agreed not to exercise control over Claimant‟s activities, acknowledged that Claimant was an independent contractor, and confirmed that Claimant would receive Form 1099s. (Hr‟g Tr. at 4-5, SkyHawke Exh. 3 (Agreement)
¶¶ 5-6, R.R at 24a-25a, 57a; FOF ¶ 5.) The Agreement indicated that SkyHawke would not provide Claimant with health insurance, workers‟ compensation insurance, paid vacation, office space, or secretarial support. (Agreement ¶ 6, R.R. at 57a.) The Agreement did include a non-compete agreement whereby, in the event of his separation from employment, Claimant agreed not to engage or compete in "any business relating to the GPS Enablement of golf courses, golf course GPS equipment, or offer products and services similar to [SkyHawke‟s] products" for one year after termination of the Agreement. (Agreement ¶ 10, R.R. at 58a; FOF¶ ¶ 5-6.) The Agreement also contained a trade secret and confidentiality agreement regarding SkyHawke‟s proprietary software. (Agreement at Exhibit A, R.R. at 61a-62a; FOF ¶ 7.) Additionally, the Agreement included a Third Party Services provision through which SkyHawke retained the right to modify or terminate the Agreement if SkyHawke determined, in its sole discretion, that Claimant‟s provision of services to other parties in the golf industry was not in SkyHawke‟s best interests or would pose an actual or potential conflict with SkyHawke‟s interests. (Agreement
¶ 13, R.R. at 59a.) Claimant indicated at the hearing that he understood this particular clause to mean that he could not perform work for any other golf GPS companies. (Hr‟g Tr. at 24, R.R. at 44a.)
Based upon this evidence, the Referee concluded that Claimant was SkyHawke‟s employee because SkyHawke: "determined the amount of remuneration to be paid"; "provided the required equipment . . . to perform the duties"; trained Claimant on how to use SkyHawke‟s equipment; required Claimant to re-do his work if SkyHawke found it lacking; and made Claimant sign confidentiality and non-compete agreements, thereby precluding Claimant from performing this type of work for competing companies. (Referee Decision at 2.) The Referee further noted that Claimant had no proprietary interest in SkyHawke. (FOF
¶ 3.) SkyHawke appealed to the Board, which affirmed the Referee‟s decision and adopted the Referee‟s findings and conclusions as its own. SkyHawke now petitions this Court for review.*fn3
On appeal, SkyHawke argues that the Board erred when it determined that Claimant was an employee, not an independent contractor, and, therefore, was eligible for UC benefits pursuant to Section 402(h) of the Law. SkyHawke contends that it overcame the presumption that Claimant was its employee by establishing, as required by Section 4(l)(2)(B) of the Law, that Claimant: (1) was free from SkyHawke‟s control or direction; and (2) was involved in an independently established business. 43 P.S. § 753(l)(2)(B).
Section 402(h) of the Law states that "[a]n employe shall be ineligible for compensation for any week . . . [i]n which he is engaged in self-employment." 43 P.S. § 802(h). Generally, there is a presumption in the Law that an individual receiving wages is an employee and not an independent contractor engaged in self-employment. Electrolux Corporation v. Department of Labor and Industry, Bureau of Employer Tax Operations, 705 A.2d 1357, 1359-60 (Pa. Cmwlth. 1998). However, an employer can overcome this presumption by establishing that a claimant is self-employed. Id. at 1360. Although the Law does not define "self-employment," our courts utilize Section 4(l)(2)(B) of the Law "to fill the void because its obvious purpose is to exclude independent ...