409 Pa. 117 | Pa. | 1962
Opinion by
This is an appeal from the affirmance by the Court of Common Pleas of Dauphin County of an order of the Bureau of Employment Security denying appellant’s petition for reassessment of its unemployment compensation contributions. Appellant is a partnership which is registered and licensed to engage in business as a broker and dealer in securities. The individuals in question are “registered representatives” who are licensed to sell securities on appellant’s behalf.
The issue before us is whether these registered representatives are included within the scope of the Pennsylvania Unemployment Compensation Law so that appellant is required to make contributions on their behalf. The following facts are pertinent to this inquiry.
The Pennsylvania Securities Act provides that a registered dealer must file an application on behalf of an individual who wishes to sell securities.
The stipulated facts before us reveal that appellant provides the registered representatives with a desk in its office, clerical and secretarial services, statistical and market analysis reports, use of a telephone and general office supplies. The registered representatives are paid strictly on a commission basis but are allowed to draw against future commissions to pay any other expenses which may arise. They have no set working
The two aspects of this relationship stressed by appellant are (1) that the registered representatives are free from control with regard to the performance of their employment, and (2) that the registered representatives develop a following among some of their customers which they can transfer to another brokerage firm in the event of the cessation of their employment with appellant. Appellant had formerly made unemployment returns on behalf of the registered representatives but stopped the practice in reliance on a federal referee’s decision that registered representatives were not subject to withholding from wages for purposes of the Social Security Act.
With these facts in mind, two provisions of the Unemployment Compensation Law must be examined. Section 4(1) (2) (B) provides: “Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that — (a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business.”
Before examining more closely the words of the statute, three preliminary observations as to the structure of the act must be noted. In the first place, it is clear that the act’s definition of “employment” extends beyond those considered “servants” or “employes” under common-law concepts. As Justice (later Chief Justice ) Stern said in Department of Labor and Industry v. Aluminum Cooking Utensil Company, 368 Pa. 276, 280, 82 A. 2d 897, 898-9 (1951), “Having in mind the broad purposes of this unemployment compensation legislation as expressed in the preamble to the act, it is our opinion that it was the intention of the legislature to provide for a larger coverage of employes entitled to unemployment compensation than merely those who would be considered employes under the common law. . . .” See Note, 36 Ill. L. Rev. of Northwestern 873 (1942). Thus the alleged lack of control by appellant over the performance of the service is not determinative of the issue before us as it might have been if we were confronted with the question of the vicarious liability of appellant for a tort committed by a registered representative.
Secondly, once it is shown by the department that an individual is performing services for wages, as that term is defined under the act, the burden shifts to the taxpayer to bring itself within either the general exception set forth in section 4(1) (2) (a) and (b) or one of the special exclusions such as section 4(1) (4) (17). Aluminum Cooking Utensil, supra; Bureau of Employment Security v. A.A.A. Moving and Storage Co., 76 Dauph. 335 (1961). Finally, the requirements of the exception in section (1) (2) being in the conjune
The first question before us, therefore, is whether the registered representatives are performing services for “wages.” The latter term is defined by the act as “all remuneration paid by an employer to an individual with respect to his employment.”
With regard to section 4(1) (2), since we find that appellant has failed to satisfy subsection (b), we need not discuss in this case subsection (a). Subsection (b) requires that the individual in question be “customarily engaged in an independently established trade, occupation, profession or business.” One is not so engaged where he is dependent upon another for the continuance of his employment and thus becomes unemployed
Appellant also attempts to invoke the special exclusion in section 4(1) (4) (17) that the word “employment” shall not include “Service performed by an individual for an employer as a . . . salesman of, shares . . . issued by an investment company.” Appellant would have us define “investment company” as “business company” and thus exempt earnings from the sales of securities generally.
Appellant’s reliance on the federal government’s decision that registered representatives are not subject to the withholding provisions of the Social Security Act is ill-founded for two reasons. In the first place, the definition of “employee” under that act is based on master-servant concepts.
Judgment affirmed.
Act of June 24, 1939, P. L. 748, §8, as amended, July 10, 1941, P. L. 317, §1, 70 P.S. §38 (Supp. 1961).
Act of June 24, 1939, P. L. 748, §11, as amended, July 10, 1941, P. L. 317, §1, 70 P.S. §41 (Supp. 1961).
Act of May 18, 1937, P. L. 658, §1, 43 P.S. §753(1) (2) (B).
Act of June 30, 1947, P. L. 509, §1, 43 P.S. §753(1) (4) (17). This section also specifically excludes real estate salesmen and insurance agents.
Act of December 5, 1936, P. L. (1937) 2897, §4, as amended, 43 P.S. §753(x).
Leinbach Company, Inc. v. Unemployment Compensation Board, 146 Pa. Superior Ct. 237 (1941). The Leinbach case was followed in. Walters v. Commonwealth of Pennsylvania, 56 Dauph. 245 (1945).
Superior Life, Health & Accident Insurance Co. v. Unemployment Compensation Board of Review, 148 Pa. Superior Ct. 307 (1942). Of course, section 4(1) (4) (17) now specifically excludes insurance agents.
Vermont Securities, Inc. v. Vermont Unemployment Compensation Commission, 118 Vt. 196, 104 A. 2d 915 (1954).
Claim of Dunne, 293 N. V. 780, 58 N.E. 2d 520 (1944).
Robert C. Buell & Co. v. Danaher, 127 Conn. 606, 18 A. 2d 697 (1941).
The registered representatives do- sell securities issued by mutual fund companies. However, appellant’s records do not distinguish with any degree of accuracy the amount of earnings from this source as opposed to the sale of other types of securities and hence appellant relies on a reading of §4(1) (4) (17) which would exclude salesmen of all types of securities.
15 U.S.C. §80a-3 (1952).
Act of November 10, 1959, P. L. 1406, §1, as amended, 15 P.S. §2852-2 (Supp. 1961).
See, e.g., Fiduciaries Investment Act of 1949, as amended, June 19, 1953, P. L. 284, §1, 20 P.S. §821.9(a) (Supp. 1961).
See, e.g., Wash. Revised Code, 50:04:230.
26 U.S.C. §1607(i) (1952).
179 F. 2d 882, 888 (8th Cir.), cert, denied, 340 U. S. 823 (1950).
Stone v. United States, 55 F. Supp. 230 (E.D. Pa. 1943).