The opinion of the court was delivered by: Bonnie Brigance Leadbetter, President Judge
SUBMITTED: December 9, 2011
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
PRESIDENT JUDGE LEADBETTER*fn1
Brandon J. Dunkelberger (Claimant) petitions for review of the order of the Unemployment Compensation Board of Review (Board) reversing the Referee‟s determination, thereby denying Claimant unemployment compensation benefits pursuant to Section 402(h) of the Unemployment Compensation Law (Law),*fn2 which declares self-employed individuals ineligible for unemployment compensation. The issue before this Court is whether the Board erred by finding that Claimant was ineligible for benefits as an unemployed businessman under Starinieri v. Unemployment Compensation Board of Review, 447 Pa. 256, 289 A.2d 726 (1972). For the reasons that follow, we affirm the order of the Board. From April of 2006 until August 18, 2010, Claimant was employed by
Window World of Greater Susquehanna Valley, Inc. (Window World), as vice-president of the corporation. As a founder of the corporation, Claimant was a one-third owner of Window World, and served as one of the corporation‟s directors. In May of 2009, corporate director and president Curtis Reid, also a one-third owner of Window World, purchased the remaining one-third interest, thereby becoming the majority shareholder of the corporation holding two-thirds of Window World‟s stock. At that point, Claimant and Reid were Window World‟s only directors. On August 18, 2010, however, Reid elected his wife to Window World‟s board of directors. Reid and his wife then used their majority vote to immediately terminate Claimant‟s employment as vice-president.
Claimant subsequently applied for unemployment compensation benefits. The Scranton UC Service Center determined Claimant to be ineligible pursuant to Starinieri. Thereafter, an unemployment compensation Referee reversed that determination, noting that Starinieri requires maintenance of a substantial degree of control over the activities and direction of the employing company. The Referee concluded:
When the claimant was removed involuntarily by a two thirds vote of the new corporation, the claimant was then removed from having any ability to have direction over the day to day operations of the corporation and, in fact, he was locked out of that company effective that date. Therefore, the claimant cannot be found ineligible for benefits under Section 402(h).
Referee‟s Decision/Order at 2. Window World then appealed the Referee‟s determination.
On appeal, the Board reversed the Referee‟s determination and denied Claimant benefits. The Board reasoned:
In supplying information to the Department, the claimant indicated that until his discharge, he had the right to hire and fire employees; was responsible for making policy decisions; had financial responsibility such as signing checks, purchasing capital, bidding on contracts and negotiating loans or leases; had an active involvement in problem solving; oversaw daily operations of the business; and that he had a substantial degree of control, or the right to exercise control, over the daily operations of the corporation.
The Pennsylvania Supreme Court has held that persons who exercise a substantial degree of control over a corporation and who become unemployed business people are ineligible for benefits. [Starinieri].
There is no dispute that the claimant was discharged from [Window World]‟s employ. However, the claimant‟s ultimate loss of control over the business is irrelevant where he admittedly exercised a substantial degree of control over the daily operations of the business up until the time of his discharge. As such, the ...