Ronald G. SHAFER, Appellee, v. STATE EMPLOYES’ RETIREMENT BOARD, Appellant.
Supreme Court of Pennsylvania.
Decided June 18, 1997.
696 A.2d 1186
Argued Dec. 9, 1996.
Since neither party presented evidence by which the learned trial court or this court can properly decide the issue of Appellant‘s capacity to sue, we vacate the Superior Court‘s order and remand the matter to the trial court to take evidence, by depositions, interrogatories, or an evidentiary hearing, to enable it to determine whether Appellant‘s activities in this Commonwealth are excluded from the definition of “doing business” pursuant to
Accordingly, the order of the Superior Court affirming the trial court‘s sustaining of Appellee‘s preliminary objections and dismissing Appellant‘s action is vacated, and the matter is remanded to the trial court for proceedings consistent with this opinion.
Elliot A. Strokoff, Harrisburg, for Ronald G. Shafer.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE and NIGRO, JJ.
CASTILLE, Justice.
The issue before this Court is whether a member of the State Employes’ Retirement System (“SERS“) who teaches at a university in a foreign country must establish the existence of an employer/employee relationship with an agency or department of the United States government in order for that member to purchase “creditable nonstate service” retirement credit pursuant to
BACKGROUND
Under the Retirement Code, the cornerstone of the benefit structure is the “standard single life annuity,” which is “an annuity equal to 2% of the final average salary, multiplied by the total number of years and fractional part of a year of credited service of a member.”
[S]ervice as an administrator, teacher, instructor in the field of education for any agency or department of the government of the United States, whether or not such area was under the jurisdiction of the United States.
1. Factual Background
On August 22, 1970, appellee was hired as a professor of English at Indiana University of Pennsylvania (“IUP“). By virtue of this employment, appellee became a member of the SERS.
In 1977, appellee applied for a Senior Fulbright-Hays Grant (“Fulbright Grant“) at Ain Shams University in Cairo, Egypt for the 1978-1979 school year. It is not in dispute that Ain Shams University is a public university in Egypt that has no connection or affiliation with the United States government.
The purpose of the Fulbright Grant program is to promote international cooperation for education, cultural advancement,
In a letter dated July 28, 1978, appellee received notification from the International Communication Agency that he had been selected to receive the Fulbright Grant to teach American Literature at Ain Shams University. Enclosed with the July 28, 1978 letter was a grant authorization form which provided that appellee would receive round trip transportation to Cairo, Egypt for him and his spouse, a stipend of $1870 per month payable in advance by the United States Embassy, and a one-day orientation program in Washington, D.C. The July 28, 1978 letter also contained a document entitled “Terms and Conditions of Fulbright-Hays Grants.” The Terms and Conditions document expressly provided that:
[A] person accepting such a grant is not by virtue thereof an official or employee of the International Communication Agency or other agency of the Government of the United States of America, or of any agency of the Government of the host country.
The Terms and Condition document also contained the following conditions: (1) appellee could not accept other compensatory employment in Egypt without approval of the American Foreign Services Post; (2) appellee was expected to perform other duties as requested by the American Foreign Sеrvices Post or the International Communication Agency during extended recesses or vacation periods for which he received his
IUP granted appellee an unpaid leave of absence to accept the Fulbright Grant and teach at Ain Shams University. While teaching at Ain Shams University, appellee did not receive a federal “GS” wage rating like other federal government employees. Appellee also did not contribute to the federal civil service retirement system nor did he accumulatе federal vacation and sick leave.
As for appellee‘s actual duties at Ain Shams University, he reported to, and was supervised by, Dr. Kamel Metwalli, the head of the Ain Shams University English Department. Ain Shams University approved the courses taught by appellee as well as appellee‘s teaching syllabus and textbooks. Ain Shams University also determined the enrollment and registration for appellee‘s classes, provided appellee with an office and supplies, and established the testing and grading procedures which appellee was required to utilize. Appellee testified that he felt as if he was an integral part of the Ain Shams University English Department during the year he taught there as a Fulbright Grant recipient.
While appellee taught at Ain Shams University, he complied with the terms and conditions of the Fulbright Grant by filing monthly reports with Dr. Frank W. Blanning, Executive Director of the Commission for Educational and Cultural Exchange Between the U.S.A. and A.R.E. Appellee also met with
At the conclusion of the 1978-1979 academic year at Ain Shams University, appellee returned to his position at IUP. Also, appellee received an IRS Form 1099 from the International Communication Agency for tax reporting purposes rather than an IRS W-2 form typically used by an employer to report wages paid to an employee during the tax year.
2. Appellee‘s Creditable Nonstate Service Claim
In March, 1981, appellee made a request to the SERS to purchase creditable nonstate service for the 1978-1979 school year that he taught at Ain Shams University pursuant to his Fulbright Grant. In a letter dated September 5, 1991,5 the SERS responded that it was awaiting information from the International Communications Agency before it could rule on appellee‘s request. After receiving the necessary information, the SERS, in a letter dated January 30, 1992, notified appellee that his request was denied and that he was ineligible to purchase creditable nonstate service for the time spent teaching at Ain Shams University. On February 10, 1992, appellee timely appealed the denial of his request. In a letter dated April 13, 1992, the SERS Appeals Committee denied his appeal.
On May 10, 1992, appellee appealed the Appeals Committee denial and requested an administrative hearing. On April 14, 1993, an independent hearing examiner held a hearing. On November 13, 1993, the hearing examiner issued an opinion in
SERS filed exceptions to the hearing examiner‘s recommendation with the State Employes’ Retirement Board (“Board“). On January 4, 1995, the Board rejected the hearing examiner‘s recommendation and denied appellee‘s request to purchase creditable nonstate service. The Board denied appellee‘s request because it believed that
Appellee then appealed to the Commonwealth Court. On November 30, 1995, the Commonwealth Court, in a two-to-one decision, reversed the Board‘s order and remanded for computation of the amount of creditable nonstate service appellee was entitled to purchase.6 This Court granted allocatur in order to determine whether a member of the SERS who is a teacher or instructor at a foreign university must establish the existence of an employer/employee relationship with an agency or department of the Unites States government in order for that member to purchase non-state retirement credit pursuant to
Our scope of review on an appeal from a final adjudication of an administrative board is limited to a determination of whether the board committed an error of law, whether there has been a violation of constitutional rights, or whether the necessary findings of fact are supported by substantial evidence. Hoerner v. Commonwealth, Public School Employees’ Retirement Board, 546 Pa. 215, 223-225, 684 A.2d 112, 116 (1996). For the reasons stated herein, we find that the Commonwealth Court committed an error of law and we reinstate the order of the Board.
1. Section 5304(c)(3)
As described above, a person‘s retirement benefit under the SERS is 2% of his “final average salary” multiplied by his number of years of “credited service.”
Our determination of whether
Appellant argues that when
[A]n active member ... shall be eligible to receive credit for nonstate service provided that he ... is not entitled to receive, eligible to receive now or in the future, or is receiving retirement benefits for such service under a retirement systеm administered and wholly or partially paid for by any governmental agency or by any private employer ... and further provided, that such service is certified by the previous employer and contributions are agreed upon and made in accordance with section 5505.
Another provision addressing the purchase of creditable nonstate service is
[T]he total contributions to purchase credit for creditable nonstate service of an active member ... shall be paid either by the member, the member‘s previous employer, or some agreed upon combination of the member, his previous employer, and if specifically provided, the Commonwealth.
Appellant also argues that
Therefore, applying the rules of statutory construction, we conclude that
Policy reasons also support the conclusion that a member who teaches at a foreign university must establish the existence of an employer/employee relationship with an agency or department of the United States government in order to be eligible to purchase creditable nonstate service pursuant to
2. Employer/Employee Relationship
The parties here do not dispute that appellee was a teacher or instructor in the field of education during the time he spent teaching at Ain Shams University pursuant to his Fulbright Grant for purposes of
The determination of whether a person is an employee centers on the ability of the alleged employer to control the person‘s physical conduct in the performance of the servicеs for which the person was engaged. Weatherly Area School District v. Whitewater Challengers, Inc., 532 Pa. 504, 508, 616 A.2d 620, 622 (1992). In order to determine whether a person is an employee, this Court has set forth the following analysis to determine whether a worker qualifies as an employee or an independent contractor:
Control of manner work is to be done; responsibility for result only; terms of agreement between the parties; the nature of the work or occupation; skill required for perfor-
mance; whether one employed is engaged in a distinct occupation or business; which party supplies the tools; whether payment is by the time or by the job; whether work is part of the regular business of the emplоyer, and also the right to terminate the employment at any time.
Zimmerman v. Public School Employes’ Retirement Board, 513 Pa. 560, 563, 522 A.2d 43, 45 (1987). None of these factors is absolutely dispositive of a person‘s status as an employee and each case must be determined on its own facts. Budzichowski v. Bell Telephone Co., 503 Pa. 160, 164, 469 A.2d 111, 113 (1983).
Appellee first argues that the requirement that he file monthly reports and a final report with the American Foreign Service Post absolutely shows that the United States government controlled his work. This argument fails for two reasons. First, this Court has held that the inspection of the progress of the work does not necessarily require an inference of exclusive control over the manner or performance of the work, but rather only of an interest in the result. Cox v. Caeti, 444 Pa. 143, 148, 279 A.2d 756, 758 (1971) (person engaged tо install stone at a construction site was an independent contractor rather than an employee of construction company; evidence that construction company inspected person‘s work did not require finding that construction company controlled that person‘s work). Second, the evidence in this case demonstrates that no department or agency of the United States government exercised control over the manner in which appellee taught at Ain Shams University pursuant to his Fulbright Grant. Instead, the evidence found by the hearing examiner and the Board demonstrates that Ain Shams University, which has no affiliation with the United States government, determined the courses appellee taught, approved appellee‘s syllabus, selected the textbooks used by appellee for teaching his courses and provided appellee with supplies and an office. Ain Shams University also determined the enrollment and registration of the students in appellee‘s classes and dictated the method in which appellee was to test his students. Moreover, the evidence showed that Dr. Metwalli, the head of
Another factor to be examined under Zimmerman is the terms of the agreement between the parties. Here, the Terms and Conditions document provided to appellee when he was notified of receiving a Fulbright Grant explicitly stated that his acceptance of the grant did not transform him into an official or employee of the United States government. Appellee acknowledged this statement by signing the Terms and Condition document which stated that appellee‘s signature evidences an understanding of the conditions imposed and an agreement to abide by the terms and conditions of a Fulbright Grant. Under Pennsylvania law, it is presumed that an adult is competent to enter into an agreement and that the signed document evidences an accurate expression of the intent of the signatories. Estate of McGovern v. Commonwealth, State Employees’ Retirement Board, 512 Pa. 377, 384, 517 A.2d 523, 526 (1986). Therefore, the terms of the agreement factor weighs against finding that appellee was an employee of an agency or department of the United States government.
Another factor Zimmerman requires this Court to review is which party supplied the tools. Here, no evidence demonstrates that the United States government supplied appellee with any tools to aid in his teaching at Ain Shams University. Instead, the evidence shows that Ain Shams University supplied appellee with an office and his supplies. Thus, this faсtor does not weigh in favor of finding that appellee was an employee of an agency or department of the United States government.
Appellee also argues that he is an employee of the United States government because the Terms and Condition document dictated the grounds upon which he could be removed by an agency of the United States. The power to terminate the employment of another for cause is not by itself
Finally, this Court has often looked to how an alleged employer treats other employees in order to determine if a person is an employee of that employer. See Zimmerman, supra. Here, appellee was not treated like other federal employees. The evidence demonstrates that appellee was not assignеd a “GS” salary rating, he did not accrue federal sick or vacation leave during his time spent teaching at Ain Shams University, and he was not eligible to participate in the federal pension system. Additionally, the evidence demonstrates that appellee was paid a monthly stipend rather than some form of salary like a typical federal employee. Moreover, appellee‘s stipend was reported to him for tax purposes on an IRS Form 1099 instead of the traditional W-2 that is issued for the typical employee. Thus, the fact that appellee was not treated similar to other federal employees weighs against finding that appellee was an employеe of an agency or department of the United States government.
After weighing the above evidence, we must conclude that appellee has failed to demonstrate the existence of an employer/employee relationship with an agency or department of the United States government. Accordingly, we conclude that appellee cannot purchase creditable nonstate service under
CONCLUSION
For the reasons stated above, we find that a member of the SERS who teaches at a foreign university pursuant to a Fulbright Grant must establish the existence of an employer/employee relаtionship with an agency or department of the United States government in order for that member to purchase creditable nonstate service pursuant to
NEWMAN, J., did not participate in the consideration or decision of this case.
NIGRO, J., files a concurring and dissenting opinion.
NIGRO, Justice, concurring and dissenting.
I concur in the result reached by the majority, but I write separately because I do not interpret
The express language of
Notes
Appellee also argues this conclusion is incоnsistent with a decision by the Board in In re: Account of Philip D. Smith, Jr., Dkt. No.1981–1, which was issued six weeks after its decision in this case. This argument fails because like Kapilian, the Smith case involved that portion of