WIT Strategy v. UCBR, 1161 C.D. 2016

Background

Claimant Jillian Ivey formed Jilletante Creative, LLC at WIT Strategy’s (WIT) request and provided PR services through the LLC from mid-2013 to April 1, 2015; WIT paid the LLC and issued a 1099 for $154,655.36 for 2014.
Claimant worked roughly 40 hours/week servicing 5–7 WIT clients; compensation was commission-based (often above the $7,000 monthly base WIT initially promised) and WIT at times altered stipend and duties (including demotion to tactician duties).
No written independent contractor agreement existed; tax was not withheld and Claimant was the LLC’s sole member with no employees.
Claimant applied for unemployment compensation; UC Service Center twice found no wages in her base year, Referee and UCBR later concluded remuneration paid through the LLC constituted wages for employment and remanded for wage calculation and separation eligibility.
Referee hearings occurred with some procedural irregularities (record/transcripts from an earlier hearing missing); UC Tax Services testified it treated single-member LLC owners as exempt from unemployment tax and that no wage investigation had been done as ordered.

Issues

Issue	Plaintiff's Argument (WIT)	Defendant's Argument (UCBR/Claimant)	Held
Whether Claimant was an employee or independent contractor	Claimant was free from WIT’s control, acted through her LLC, received 1099, set hours/location, and could/ did perform work for others — thus independent contractor	Claimant worked set hours for WIT clients, WIT controlled means (reviews, demotion, direction on tasks), LLC was formed at WIT’s insistence and functioned as a shell	Court held Claimant was an employee; UCBR’s findings that WIT retained control and Claimant was not customarily engaged in an independent business were supported by substantial evidence
Whether WIT’s due process rights were violated by use of prior-hearing evidence and missing transcripts	WIT asserted it lacked notice and opportunity at an earlier hearing and Referee relied on lost/prior testimony, violating due process; sought remand	UCBR acknowledged Referee erred if relying on prior hearing memory but performed independent review of the record and denied remand, finding no prejudice or unresolved constitutional defect	Court held no due process violation by UCBR; independent review cured asserted Referee errors and record supported UCBR decision

Key Cases Cited

Quality Care Options v. Unemployment Comp. Bd. of Review, 57 A.3d 655 (Pa. Cmwlth. 2012) (two-prong test for independent contractor status and presumption of employment)
Kurbatov v. Dep’t of Labor & Indus., Office of Unemployment Comp., Tax Servs., 29 A.3d 66 (Pa. Cmwlth. 2011) (conjunctive two-prong independent contractor test explained)
Electrolux Corp. v. Dep’t of Labor & Indus., Bureau of Employer Tax Operations, 705 A.2d 1357 (Pa. Cmwlth. 1998) (control focuses on means of accomplishment, not final product)
Venango Newspapers v. Unemployment Compensation Board of Review, 631 A.2d 1384 (Pa. Cmwlth. 1993) (news carriers held independent contractors where they controlled manner of delivery)
CE Credits OnLine v. Unemployment Compensation Board of Review, 946 A.2d 1162 (Pa. Cmwlth. 2008) (distinguishing quality control from control over means of work)
Stage Road Poultry Catchers v. Dep’t of Labor & Industry, Office of Unemployment Compensation, Tax Services, 34 A.3d 876 (Pa. Cmwlth. 2011) (written contractor designation and 1099 are relevant factors but not dispositive)
Sharp Equip. Co. v. Unemployment Comp. Bd. of Review, 808 A.2d 1019 (Pa. Cmwlth. 2002) (extensive engagement with one putative employer limits opportunity to serve others)
Jia v. Unemployment Comp. Bd. of Review, 55 A.3d 545 (Pa. Cmwlth. 2012) (permission requirements to deviate from prescribed time/place support employee status)
Stauffer v. Unemployment Compensation Board of Review, 74 A.3d 398 (Pa. Cmwlth. 2013) (focus on whether claimant was restricted from performing services for others, not whether claimant actually did so)