J. A. Stuckman v. UCBR (Majority Opinion)

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IN THE COMMONWEALTH COURT OF PENNSYLVANIA James A. Stuckman, : Petitioner : : v. : : Unemployment Compensation Board of : Review, : Respondent : BEFORE: No. 1872 C.D. 2007 Submitted: February 1, 2008 HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JIM FLAHERTY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY SENIOR JUDGE FLAHERTY FILED: April 2, 2008 James A. Stuckman (Claimant) petitions for review from an order of the Unemployment Compensation Board of Review (Board) which affirmed the decision of a referee denying Claimant unemployment compensation benefits pursuant to Section 402(h) of the Unemployment Compensation Law (Law), Act of December 5, 1936, Second Ex. Sess., P.L. 2897, as amended, 43 P.S. § 802(h), due to his self-employment.1 We affirm. 1 Section 402(h) of the Law, 42 P.S. § 802(h), provides that: An employe shall be ineligible for compensation for any week -. . . (h) In which he is engaged in self-employment: Provided, however, That an employe who is able and available for full-time work shall be deemed not engaged in self-employment by reason of continued participation without substantial change during a period of unemployment in any activity including farming (Footnote continued on next page ¦) Claimant last worked for Jackson Hewitt (Employer) in Pittsburgh as a full-time seasonal tax preparer from January 2, 2004 until his discharge on December 11, 2006. Claimant thereafter applied for unemployment benefits, which were denied by the job center. Claimant appealed to the referee, who conducted a hearing and made findings of fact. The referee found that Claimant worked forty to forty-five hours per week preparing personal income tax returns for Employer during the personal tax season which ended April 15, 2006. Claimant also acted as an office manager for the Pittsburgh office and taught classes in the fall. During the fall, Claimant worked five to seven hours per week. Claimant was laid off during the summer months. On October 10, 2006, Claimant and his partner entered into an agreement with Employer to open a tax service office (JSM) in North Huntingdon. Claimant and his partner each have a fifty percent interest in the partnership. The partners purchased equipment for the JSM tax office in November of 2006 and began advertising in December. Claimant and his partner applied for a tax service identification number for JSM on December 21, 2006. Claimant and his partner opened the business on January 2, 2007. While still working for Employer in 2006, Claimant devoted about five to seven hours per week developing the new tax service office, through (continued ¦) operations undertaken while customarily employed by an employer in full-time work whether or not such work is in employment as defined in this act and continued subsequent to separation from such work when such activity is not engaged in as a primary source of livelihood. 2 December 6, 2006. From January 1 through April 15, 2007, Claimant devoted about forty to forty-five hours per week at JSM. JSM generated no revenue in 2006. In 2007, JSM had revenue of $28,000.00 through April 15, 2007. During this same period, JSM incurred $28,000.00 in expenses. Claimant was available for employment. The referee concluded that based on the above findings, Claimant was engaged in self-employment and ineligible for unemployment benefits. The referee specifically concluded that Claimant s work at JSM substantially increased after his separation from Employer. Claimant appealed to the Board which adopted the findings and conclusions of the referee and entered an order affirming the decision of the referee. This appeal followed.2 In accordance with Section 402(h) of the Law, 43 P.S. § 802(h), an individual is ineligible for benefits for any week in which he is engaged in selfemployment. However, self-employment will not disqualify an applicant if the following four conditions are met: (1) the self-employment began prior to the termination of the employee s full-time employment; (2) the self-employment continued without substantial change after termination; (3) the employee remained available for full-time employment; and (4) the self-employment was not the primary source of employee s livelihood. O Hara v. Unemployment Compensation Board of Review, 648 A.2d 1311 (Pa. Cmwlth. 1994). The claimant bears the burden of proving that his activity is non-disqualifying under Section 402(h). Id. 2 Our review is limited to determining whether constitutional rights were violated, errors of law were committed or whether findings of fact are supported by substantial evidence. Sheets v. Unemployment Compensation Board of Review, 708 A.2d 884 (Pa. Cmwlth. 1998). 3 Here, Claimant argues that contrary to the determination of the referee and Board, the hours worked at JSM did not substantially change after his separation with Employer. We disagree. As the findings indicate, Claimant worked in his sideline business of JSM for five to six hours per week prior to his separation from Employer in midDecember, 2006. In January, Claimant devoted approximately forty hours per week to JSM. As stated in Higgins v. Unemployment Compensation Board of Review, 405 A.2d 1024 (Pa. Cmwlth. 1979), a side-line activity has substantially changed if a claimant devotes more time to it after a separation from employment than before. Here, Claimant went from working five to six hours per week, prior to his separation from Employer, to working forty hours, or more than six times as many hours per week, after his separation. This court previously determined in Quinn v. Unemployment Compensation Board of Review, 446 A.2d 714 (Pa. Cmwlth. 1982), that a substantial change occurred when the claimant worked thirty hours prior to the separation from employment and, after separation, worked sixty hours per week. Also, a substantial change was found in Higgins when the claimant worked ten hours every third week prior to the separation from employment and then worked forty to forty-five hours per week after the separation. Claimant, nonetheless, argues that the substantial change test should be approached differently because of the seasonal nature of tax preparation and that the hours he worked did not substantially change if such hours are calculated out over a year s period. The test, however, irrespective of profession, is whether a claimant's self-employment continued without substantial change after his separation. Here, Claimant s hours greatly increased from five to six hours per 4 week prior to the separation, to forty hours per week after the separation. Such an increase in hours constitutes a substantial change, thereby disqualifying Claimant from benefits. In accordance with the above, the decision of the Board is affirmed. JIM FLAHERTY, Senior Judge 5 IN THE COMMONWEALTH COURT OF PENNSYLVANIA James A. Stuckman, : Petitioner : : v. : : Unemployment Compensation Board of : Review, : Respondent : No. 1872 C.D. 2007 ORDER Now, April 2, 2008, the Order of the Unemployment Compensation Board of Review, in the above-captioned matter, is affirmed. JIM FLAHERTY, Senior Judge

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