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Peter B. Kurbatov, D/B/A Pbk Construction v. Department of Labor and Industry

September 30, 2011

PETER B. KURBATOV, D/B/A PBK CONSTRUCTION, PETITIONER
v.
DEPARTMENT OF LABOR AND INDUSTRY, OFFICE OF UNEMPLOYMENT COMPENSATION, TAX SERVICES, RESPONDENT



Per curiam.

ORDER

AND NOW, this 30th day of September, 2011, it is ordered that the above-captioned opinion filed on July 7, 2011, shall be designated OPINION, rather than MEMORANDUM OPINION, and it shall be reported.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Peter B. Kurbatov, d/b/a : PBK Construction, : Petitioner : v. Department of Labor and : Submitted: April 15, 2011 Industry, Office of Unemployment : Compensation, Tax Services, : Respondent :

No. 2200 C.D. 2010 :

BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JOHNNY J. BUTLER, Judge OPINION BY

JUDGE SIMPSON

FILED: July 7, 2011

In this appeal, Peter B. Kurbatov, d/b/a PBK Construction (PBK), asks whether the Department of Labor and Industry (Department) erred in denying its petition for reassessment (petition) of unemployment compensation taxes. The central issue is whether PBK‟s workers are employees (for whose services unemployment compensation taxes are due) or independent contractors (for whose services taxes are not due). The Department concluded the workers were employees, and it assessed unemployment compensation taxes against PBK. Upon review, we affirm.

In December 2009, the Office of Unemployment Tax Services assessed PBK $35,936.85 for unpaid contributions, interest and penalties for the second, third and fourth quarters of 2005, 2006, 2007 and 2008. Notice of Assessment, R.R. 94a-95a.*fn1 PBK petitioned for reassessment on the ground that the workers for whom contributions were assessed were independent contractors and thus did not qualify as employees under Section 4(l)(2)(B) of the Unemployment Compensation Law (Law), Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §753(l)(2)(B). A hearing ensued before a hearing officer.

Two witnesses testified: the unemployment compensation tax agent (Agent) who audited PBK‟s records and Kurbatov. In addition, the hearing officer received into evidence a packet of documents submitted by PBK.

The Department subsequently issued a final decision holding the workers were PBK‟s employees. The Department made findings which may be summarized as follows.

Kurbatov is the sole proprietor of PBK, a business engaged in installation of exterior insulation for commercial properties. Dep‟t Op., Finding of Fact (F.F.) No. 2. Companies contract with PBK for construction projects. F.F. No. 4. PBK hires individuals to complete the work on projects. F.F. No. 5.; Notes of Testimony (N.T.), 5/14/11, at 35-36. The size of the project determines the number of workers PBK hires. Id. Some workers work on the full project.

F.F. No. 6; N.T. at 31. Other workers work only on specific tasks for a portion of the project. F.F. No. 6, N.T. at 31.

PBK compensates each worker based on the square footage of insulation each worker installs. F.F. No. 7; N.T. at 33-34. Each worker submits a verbal invoice to PBK for work performed. F.F. No. 8; N.T. at 33-34.

PBK does not provide individuals with protective gear, hand tools, or training. F.F. No. 10-11. However, "PBK provides the necessary equipment and materials to complete the work, such as building materials, tarps and heaters." F.F. No. 9.

PBK requires each worker to sign an independent contractor agreement (agreement) for each project, F.F. No. 12, during each of the years at issue. N.T. at 34-35. Some individuals worked on multiple projects and entered into multiple independent contractor agreements with PBK. Each agreement was a standard form contract, with blank lines for job-specific information such as work location, completion date, and rate of pay per square foot of work. Each agreement identified Pennsylvania law as governing the agreement. Each agreement covered work performed in Pennsylvania.

In accordance with each agreement, PBK determines the hours an individual works. F.F. No. 16. Important to our analysis is a term of the agreement which provides that "individuals may not leave the job site without permission from PBK." F.F. 15. Also of significance, individuals are not permitted to ...


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