The opinion of the court was delivered by: Mary Hannah Leavitt, Judge
Submitted: August 26, 2011
BEFORE: HONORABLE DAN PELLEGRINI, Judge*fn1 HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE JOHNNY J. BUTLER, Judge*fn2
Osborne Associates, Inc., d/b/a Generations Salon Services
(Generations) petitions for review of an adjudication of the
Unemployment Compensation Board of Review (Board) holding, on remand,
that Barbara P. Levicke (Claimant) was an employee of Generations and,
thus, eligible for unemployment compensation benefits. *fn3
Generations contends that the Board erred in holding that
Claimant, who worked as a substitute cosmetologist on eight occasions
over the course of 2008, was its employee rather than an independent
contractor. Generations argues that the factors developed by case law
precedent to determine whether an individual is in an
employer-employee relationship leads to the inescapable conclusion
that Claimant worked as an independent contractor for Generations.
Thus, the Board erred in holding that for purposes of Section 402(h)
of the Unemployment Compensation Law*fn4 Claimant was
an employee of Generations. We agree and, for the reasons that follow,
reverse the Board.
Claimant is a licensed cosmetologist employed by "LA Hair." Reproduced Record at 40a (R.R. __). In November 2007, LA Hair reduced Claimant‟s hours, and the UC Service Center awarded her partial unemployment benefits. While collecting benefits, Claimant reported her earnings from LA Hair as well as the $986 she earned working as a substitute for Generations on eight separate occasions between July and November of 2008.
Claimant‟s reported income prompted the UC Service Center to investigate whether Claimant was self-employed. It concluded on December 18, 2008, that Claimant was an employee of Generations and not an independent contractor. Generations appealed this determination, and a hearing was held before a Referee.
At the hearing, Claimant appeared, pro se, but Generations did not appear. The owner and president of Generations, Marvin Weinstein, had requested the opportunity to testify by telephone because he was in Florida, but the Referee denied the request as untimely because it was received two days before the hearing.
Claimant, the sole witness, testified that in 1997 she worked for Generations as an independent contractor under a written agreement. Under that agreement, Claimant provided hairstyling services to residents at a specific nursing home that had contracted with Generations for these services. In August 2008, without entering into a new written agreement, Generations again engaged Claimant to provide services to residents at different senior living facilities that had contracted with Generations. Claimant filled in when one of Generations‟ regular cosmetologists was unable to work because of sickness or vacation.
Claimant testified that she provided certain tools, such as brushes, scissors, a hair dryer and a curling iron, for her work. She stated that Generations provided the perm solutions, dyes, peroxide, creams, rollers, clips, capes and shampoo, as well as facial cleaning products and cotton balls.
Claimant also testified that she was compensated on a commission basis and received an IRS Form 1099 from Generations. This required her to pay the income taxes on these earnings. Claimant did not find this a problem because 98% of her income taxes were deducted from the compensation she received from LA Hair.
The Referee determined that Claimant was an employee of Generations. Generations appealed, and the Board remanded. It designated the Referee to serve as its hearing officer to determine whether Generations had cause for its nonappearance at the prior hearing and, if so, to take additional evidence on the merits.
At the remand hearing, Weinstein testified and explained why his request to testify by telephone was made two days before the hearing. The Board accepted his explanation and proceeded to the merits.
Weinstein testified about the nature of Claimant‟s work for Generations. He explained that Generations provides hairstyling services to residents of senior living facilities. He confirmed Claimant‟s testimony that she worked as a substitute and was paid by commission. He elaborated on this latter point, noting that Claimant‟s commission was different on each of the eight days she worked, depending on what Claimant worked out with Anita Fantic, Generations‟ manager. The charge for each hairstyling service was established by the senior living facility. Claimant sent Generations an invoice for the services she provided residents. Weinstein stated that Claimant was free to leave the facility without seeing all the residents scheduled for services; however, he acknowledged that such conduct would likely end her substitute engagements by Generations. Weinstein testified that Claimant was free to contract with other salons in competition with Generations.
Weinstein testified that Claimant provided her own scissors, the most critical tool, and that items such as shampoo were provided by Generations or by the cosmetologist she replaced. Generations did not supervise Claimant‟s work, and no one checked on the hairstyling work she did for residents. Generations did not instruct Claimant on how to do hairstyling; provide her any training; or require her to attend meetings.
Claimant testified briefly at the remand hearing. She explained that an unnamed individual at the Board of Cosmetology informed her that cosmetologists cannot be independent contractors. Claimant stated that Fantic called her when she needed a substitute, and her commission changed according to Fantic‟s level of desperation.
The Board held that Claimant was an employee, not an independent contractor, reasoning that the Beauty Culture Law,*fn5 commonly referred to as the Cosmetology Law, and its implementing regulation required Claimant to be in an employment relationship with Generations.
Generations appealed to this Court. It argued that the Board erred in relying exclusively on the cosmetology regulatory scheme to find that Claimant was an employee. Generations argued that the Board should have applied the factors developed in our case law precedent for determining whether a claimant is in an employment relationship. We agreed and ordered a remand. Osborne I, 3 A.3d at 733. We explained that the Board could consider the regulatory requirements for providing services ...