Rolland v. Commonwealth, Unemployment Compensation Board of Review

418 A.2d 807, 53 Pa. Commw. 562, 1980 Pa. Commw. LEXIS 1708

• Court: Commonwealth Court of Pennsylvania
• Decided: August 26, 1980
• Docket: Appeal, No. 2627 C.D. 1978
• Status: Published

Opinions

Opinion by

Judge Blatt,

Forrest A. Holland, Jr., (claimant) appeals here from an order of the Unemployment Compensation Board of Review (Board) which affirmed a referee’s decision finding him to be a self-employed businessman and therefore ineligible for benefits pursuant to Section 402(h) of the Unemployment Compensation Law (Law), Act of December 5, 1936, Second Ex. Sess,. P.L. (1937) 2897, as amended, 43 P.S. §802(h). We will affirm.

The claimant was president and a member of the board of directors of General Dealers Services, Inc. (corporation) and received a salary of $480 per week. He owned approximately one percent of the stock of the corporation and voted these shares at the stockholders’ meetings. The evidence reveals, and the referee so found, that the chairman of the board of directors of the corporation exercised ultimate control over the corporation but that the claimant oversaw its everyday business and played a substantial part in the overall control and policymaking. The claimant sold his stock and resigned from his position as president and member of the board of directors in January of 1978 at the request of the chairman of the board of directors, who wished to consolidate the corporate power in his own family.

In Starinieri v. Unemployment Compensation Board of Review, 447 Pa. 256, 289 A.2d 726 (1972), our Supreme Court held that a person need not be a majority shareholder of a corporation in order to be ineligible for benefits as a self-employed businessman. According to the Court in Starinieri, 447 Pa. at 259, 289 A.2d at 727, a self-employed businessman is “one who through ownership of stock and his position in the corporation exercises a ‘substantial degree of control’ over its operation.”

The claimant contends that this Court should reverse the order of the Board in the case at hand because there is not substantial competent evidence, as required by Section 704 of the Administrative Agency Law, 2 Pa. C.S. §704, to support a finding of such control as is required under Starinieri, supra.

It is undisputed that the claimant met the first requirement set forth in Starinieri, supra: i.e., that of owning stock in the corporation. And, although it was a small portion of stock that he owned, the number of shares is not the decisive factor in our determining whether or not he was a self-employed businessman. Starinieri, supra. See Newman v. Unemployment Compensation Board of Review, 37 Pa. Commonwealth Ct. 455, 390 A.2d 1382 (1978) (ownership of eight percent of a corporation’s shares coupled with substantial degree of control over the corporation is sufficient to show self-employment).

We also believe that there is substantial evidence in the record to support the Board’s finding that the claimant exercised a substantial degree of control over the corporation. For example, the testimony at the hearing indicates that the claimant, when interviewed by a representative of the Bureau of Employment Security for the purpose of determining his eligibility for benefits, stated that, as president of the corporation and as a member of its board of directors, he exercised almost total control over the policies of the corporation. The evidence also shows that he normally signed checks for the corporation and that he had the power to hire and fire employees of the corporation.

We must conclude that, because the claimant exercised a substantial degree of control over the corporation and owned stock in the corporation, he was a self-employed businessman and, as such, is ineligible for unemployment compensation under Section 402(h) of the Law, 43 P.S. §802(h).

Order

And Now, this 26th day of August, 1980, the order of the Unemployment Compensation Board of Review in the above-captioned matter is affirmed.