Court Opinion

ID: 9754301
Source: CourtListenerOpinion
Date Created: 2023-08-28 19:54:42.424562+00
Date Added: 2024-06-11T07:27:51.785370
License: Public Domain

OPINION BY
Judge COHN.
Michael W. Kelly (Claimant) petitions for review1 of an order of the Unemployment Compensation Board of Review (Board) that affirmed a referee’s determination that Claimant was ineligible for unemployment compensation benefits under the Unemployment Compensation Law (Law)2 because he was not “unemployed” as that term is statutorily defined. The order appealed also concluded that Claimant was subject to a fault overpayment of $9,570.00,3 for failing to report his earnings and employment to the job center.4
The referee found that, after losing his full-time sales manager position in November of 2001, Claimant applied for unemployment compensation, and the Office of Employment Security (OES) determined that Claimant, was eligible for benefits. Beginning January 1, 2002, while still receiving unemployment compensation, Claimant began working full-time in real estate sales, with pay on a commission only basis. While in this position, he continued to file for and receive unemployment compensation benefits on a regular basis. Claimant finally earned his first commission from his real estate sales on April 17, 2002, and he reported the resulting $471.00 in earnings to his local job center.5
Subsequently, OES determined that Claimant had been ineligible for unemployment compensation benefits for the weeks ending January 5, 2002, through June 15, 2002, because he had not been “unemployed” during that period. Finding that Claimant was working full-time as of January 1, 2002, albeit on a commission only basis, OES concluded that Claimant had not been entitled to receive benefits after that date. In addition, OES determined that Claimant was subject to a fault overpayment and was also subject to an additional twenty-five-week period of disqualification pursuant to Section 801(b) of the Law, 43 P.S. § 871(b).6 (O.R., Item 4.)
Claimant appealed. According to the Notice of Hearing sent to Claimant, the specific issues to be considered in his ap*471peal were: (1) whether Claimant was unemployed under Sections 401 and 4(u) of the Law; (2) whether Claimant was subject to an additional period of disqualification under Section 801 of the Law on the basis he had made a false statement in his application for benefits; and (8) whether Claimant received benefits to which he was not entitled and, if so, whether the fault or non-fault provisions of Section 804 of the Law should govern the recoupment of such compensation. (O.R., Item 6.)
With regard to Claimant’s eligibility for benefits under Sections 401 and 4(u) of the Law, the referee, like the OES, determined that because Claimant was involved in real estate sales on a full-time basis, he was no longer “unemployed” as of January 1, 2002,7 notwithstanding the fact that he was paid solely by commission. The referee also determined that, because Claimant improperly received unemployment compensation due to his failure to report his employment, he was subject to the fault provisions of Section 804(a) of the Law. However, concluding that Claimant did not deliberately fail to disclose this information, the referee did not impose penalties under Section 801(b) of the Law.
Claimant then appealed to the Board, which, after adopting the referee’s findings and conclusions in their entirety, made an additional determination. Noting that Claimant took a position as an independent contractor as of January 1, 2002, it concluded that, in addition to being ineligible under Section 4(u) of the Law, Claimant “would also be ineligible for benefits under Section 402(h) and 4(Z )(2)[(B)] of the Law (pertaining to self employment and independent contractors.”)8 (O.R., Item 10.) Claimant now appeals to this Court.9
First, Claimant argues that the Board erred in determining that he was ineligible for unemployment compensation benefits during the period in question on the basis that he was not “unemployed.” To the contrary, Claimant contends that he remained “unemployed” throughout his entire benefit period and, thus, received no benefits to which he was not entitled. He also asserts that he should not have been subject to a fault overpayment because the record does not support the notion that he engaged in any conduct justifying such a sanction.
Was Claimant “Unemployed?”
Section 401 of the Law provides that compensation shall be payable to “any employe who is or becomes unemployed ...” (emphasis added). There is no dispute that Claimant became unemployed in November of 2001, when he lost his sales *472manager job; the question is whether he remained unemployed after taking the real estate sales job in January 2002. Section 4(u) of the Law defines the term “unemployed” as follows:
An individual shall be deemed unemployed (I) with respect to any week (i) during which he performs no services for which remuneration is paid or payable to him and (ii) with respect to which no remuneration is paid or payable to him, or (II) with respect to any week of less than his full-time work if the remuneration paid or payable to him with respect to such week is less than his weekly benefit rate plus his partial benefit credit.
43 P.S. § 753(u) (emphasis added).
In spite of his considerable efforts, the record is clear that, with the exception of one week in April of 2002, Claimant received no remuneration during the period in question. However, Claimant did perform services for which remuneration could eventually be payable to him. A commission is a fee earned by an agent for transacting an item of business. See Mer-RIAM-WebsteR Collegiate DictionaRY 230 (10th ed.2001). The fee is normally a percentage of the money received by the agent responsible for conducting the business. Id. Thus, in such an arrangement, the fee cannot even be calculated, much less paid, until the transaction is completed. Therefore, all such work is performed with an expectation of payment in the future. Thus, we conclude that Claimant, because he worked on a commission basis, was not “unemployed” as that term is statutorily defined.
Case law supports this result. Both Myers v. Unemployment Compensation Board of Review, 101 Pa.Cmwlth. 149, 515 A.2d 1013 (1986), and Jeter v. Unemployment Compensation Board of Review, 78 Pa.Cmwlth. 279, 467 A.2d 418 (1983), state that the expectation of possible future benefits can constitute remuneration as intended by Section 4(u).
In Myers, the claimant lost her previous job under circumstances that were not disqualifying. She then began performing administrative services for a different employer on a voluntary basis; in fact, the employer told her that she would not be paid for these services because there was no money coming in. However, the claimant was informed that, if the employer started to make sales in the future, the claimant would receive a commission based upon those sales. Notwithstanding the employer’s assertion that it would not pay her for her work as an administrator before there were any sales, the claimant submitted an invoice for her “volunteer” services, which the employer paid. In Myers the claimant did not even challenge, on appeal, the finding that she was employed. Rather, the issue in the case was whether the Board erred in assessing a fault overpayment. The Court held that it had and reversed on that basis.
In Jeter, the claimant worked as the executive director of a welfare rights organization and was paid from funds received under a public contract. When the contract was not initially renewed, the claimant was laid off due to a lack of funds. However, the claimant continued to perform her job voluntarily based on her supervisor’s promise that she would be paid for those services if the contract was renewed. Subsequently, it was and the claimant received a “bonus” equal to the salary she would have received if there had been no interruption in the contract. The Court held that “Claimant ... can only be said to be performing services upon the expectation of receiving a possible future benefit, and ... she, therefore, was not “unemployed” within the intendment of Section 4(u) of the Law.” Id. at *473420. Thus, the claimant received remuneration in the future for services attributable to services performed earlier in time and for which there was no initial guarantee that she would ever be paid. This is precisely what occurs when one works on a commission basis, such as in the matter sub judice.
Both Myers and Jeter, in turn, cite to Unemployment Compensation Board of Review v. Miedama, 27 Pa.Cmwlth. 207, 365 A.2d 900 (1976). In Miedama, the claimant lost her job with one travel agency and agreed to “volunteer” her services at another travel agency in exchange for the use of their facilities, which enabled her to continue to participate in her profession and retain her clients. We concluded that, although the claimant was not paid for her services at the new agency, she did receive a form of “remuneration” and, therefore, was not “unemployed” within the definition of Section 4(u). However, in order to reach that conclusion, the Court had to accept the underlying premise that one could perform work in the present, based only upon an expectation of remuneration in the future, and that, in such a situation, the person was not “unemployed” within the meaning of the Section 4(u) of the Law.10
Was Claimant “At Fault?”
We turn now to the question of whether imposition of a fault overpayment was proper. The word “fault” within the meaning of Section 804(a) of the Law connotes “an act to which blame, censure, impropriety, shortcoming or culpability attaches .... ” Greenawalt v. Unemployment Compensation Board of Review, 117 Pa.Cmwlth. 96, 543 A.2d 209, 211 (1988) (quoting Cruz v. Unemployment Compensation Board of Review, 110 Pa.Cmwlth. 117, 531 A.2d 1178, 1180 (1987)). Conduct that is designed improperly and intentionally to mislead the unemployment compensation authorities is sufficient to establish a fault overpayment. Gheenawalt. To find fault, the Board must make some findings with regard to a claimant’s state of mind. Id.
In the case sub judice, the record is completely devoid of any findings that would demonstrate any “fault” on Claimant’s part. To the contrary, the referee found that Claimant “did not knowingly withhold material information from the service center nor did he knowingly pro-*474vide false information to receive compensation not due.” (referee’s Findings of Fact, Nos. 7 and 10, O.R., Item 8.) This finding is supported by Claimant’s undisputed testimony. Thus, the referee and the Board erred in concluding that Claimant received an overpayment because of his own fault-based conduct and, therefore, we will reverse that portion of the Board’s order.
Because we determine that Claimant was ineligible for benefits during the time at issue on the basis that he was not then “unemployed,” we uphold the Board decision to deny benefits. We reverse the imposition of a fault overpayment, however, in light of the lack of any evidence of culpability on Claimant’s part.

ORDER

NOW, January 8, 2004, the order of the Unemployment Compensation Board "of Review in the above-captioned matter is hereby affirmed in part and reversed in part in accordance with the foregoing opinion.

. This case was reassigned to the opinion writer on November 4, 2003.

. Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. §§ 751-914.

. Section 804(a) of the Law, 43 P.S. § 874(a), provides in pertinent part:
Any person who by reason of his fault has received any sum as compensation under this act to which he was not entitled, shall be liable to repay to the Unemployment Compensation Fund to the credit of the Compensation Account a sum equal to the amount so received by him and interest at the rate determined by the Secretary of Revenue....

. On appeal, the Board found that there had been no earnings to report until April 17th, but that Claimant had failed to report that he was now working full-time as a real estate salesperson on a commission basis.

. Claimant’s benefits were ultimately exhausted on June 15, 2002.

. Section 801(b) of the Law provides, in pertinent part:
Whoever makes a false statement knowing it to be false, or knowingly fails to disclose a material fact to obtain or increase any compensation or other payment under this act ... may be disqualified in addition to such week or weeks of improper payments for a penalty period of two weeks and for not more than one additional week for each such week of improper payment.
43 P.S. § 871(b).

. The referee’s decision actually states that Claimant “became fully un employed as of ... January 1, 2002, given his real estate activities.” (Referee's op., O.R., Item 8) (emphasis added). The referee’s typographical error was noted in the Board's decision, wherein it states “the decision should read the claimant became fully employed as of January 1, 2002, given his real estate activities.” (O.R., Item 10) (emphasis added).

. We note that the issue of self-employment was not included in the Notice of Hearing sent to Claimant; therefore, he received no notice that he might be considered ineligible for benefits under these Sections, and he had no opportunity to prepare a defense against such a ruling. However, because of our disposition our this case, we need not reach the issue of self-employment and, therefore, any due process violation stemming from this lack of notice is harmless.

.Our scope of review is limited to determining whether constitutional rights were violated, whether the adjudication is in accordance with the law or whether necessary findings of fact are supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa.C.S. § 704; Greenawalt v. Unemployment Compensation Board of Review, 117 Pa.Cmwlth. 96, 543 A.2d 209 (1988).

. Claimant also argues that he is entitled to benefits under Section 4(Z)(4)(17) of the Law, 43 P.S. § 753(Z)(4)(17). While there is some dispute as to whether this issue has been raised, we will address the question because the dissent does so. This Section provides, in pertinent part, "[t]he word 'EMPLOYMENT' shall not include ... Service performed by an individual for an employer as ... a real estate broker ..., if all such service performed by such individual for such employer is performed for remuneration solely by way of commission....” Under Section 401 of the Law, 43 P.S. § 801, the rule is that "[compensation shall be payable to any employe who is or becomes unemployed, and who (a) [h]as, within his base year, been paid wages for employment as required by section 404(c) of this act....” (Emphasis added.) Claimant, therefore, must have earned wages during his base year in "employment,” as defined by the Law, in order to receive benefits. At the point where Claimant lost his job as a sales manager/employee, he met this criterion and was, thus, financially eligible for benefits initially. However, once he began his full-time real estate work, he was no longer "unemployed" under Section 4(u) of the Act and it is this provision that operates to preclude him from receiving benefits. While this may seem harsh, we cannot help but note that a real estate sales person separated initially from employment, where he was working solely on a commission basis, would also be denied benefits under Sections 401(a) and 4(Z)(4)(17). The reason would be the lack of base year wages. This is because full-time real estate work performed only on a commission basis is specifically excluded under the definition of "employment.”