Court Opinion

ID: 9919501
Source: CourtListenerOpinion
Date Created: 2024-01-18 16:11:49.607241+00
Date Added: 2024-06-11T08:04:30.650289
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Linda’s Cleaning Consultants, Inc.,       :
                  Petitioner              :
            v.                            :
                                          :
Department of Labor and Industry,         :
Office of Unemployment                    :
Compensation Tax Services,                :   No. 457 C.D. 2021
                 Respondent               :   Submitted: December 4, 2023

BEFORE:      HONORABLE RENÉE COHN JUBELIRER, President Judge
             HONORABLE CHRISTINE FIZZANO CANNON, Judge
             HONORABLE ELLEN CEISLER, Judge

OPINION
BY JUDGE FIZZANO CANNON                                     FILED: January 18, 2024

             Linda’s Cleaning Consultants, Inc. (Employer) petitions for review of
the March 26, 2021, decision and order of the Department of Labor and Industry
(Department). The Department denied Employer’s petitions for reassessment of its
required contributions to the unemployment compensation (UC) system after
concluding that certain of Employer’s workers were employees and not independent
contractors. Upon review, we affirm.

                     I. Factual and Procedural Background
             In November 2016, the Department’s Office of Unemployment
Compensation Tax Services (Office) issued notices to Employer assessing roughly
$24,000 in UC contributions, interest, and penalties for all quarters of calendar years
2012 through 2015 and roughly $6,500 for the first three quarters of 2016.1
Department’s Final Decision and Order, 3/26/21, at 1-2; Certified Record (C.R.)
#24. After Employer filed petitions for reassessment, the matters were consolidated,
and a hearing officer conducted a hearing on November 8, 2018. Id. at 2.
               Biju Varukunnel (Varukunnel), a UC tax agent, testified for the Office.
Reproduced Record (R.R.) at 14a. He audited Employer’s records and prepared the
notices of assessment. Id. at 15a. The 2012-15 assessment was based on Employer’s
records during those years, and the 2016 assessment was an estimate based on the
2015 records.2 Id. at 16a. The investigation and audit process began when an
individual filed a claim for UC benefits, but that person’s wage information was not
in Employer’s reported records. Id. at 19a. Varukunnel discovered during his audit
that although Employer is registered as a cleaning consultant, its disbursement
records indicated that workers were being paid for construction activities (including
painting and flooring). Id. at 21a & 52a-53a. He also found that Employer’s workers
did not invoice Employer for their remuneration. Id. at 22a. Varukunnel concluded
that Employer primarily provided cleaning services, but if a customer asked for
home improvement work, Employer sent someone to do it and paid that person
directly. Id. at 54a. Varukunnel stated that he also based his conclusions on
documents he received from Employer during the audit and from UC-110 forms sent
to Employer and to worker-claimants; the UC-110 form asks for the type of work

       1
         Section 301 of Pennsylvania’s Unemployment Compensation Law (UC Law), Act of
December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §§ 751-919.10,
requires employers to pay contributions into the UC system; the contributions are based on
employee wages and calculated using a statutory formula. See 43 P.S. § 781.

       2
         The parties ultimately stipulated that the amount at issue is $6,480.25, which is slightly
lower than the Office’s estimate of $6,500. Certified Record (C.R.) #23.
                                                2
performed and whether the claimant has his own independent trade or business. Id.
at 58a-61a.
              Linda Goldstein (Goldstein) testified for Employer. R.R. at 67a. She
is Employer’s officer and principal. Id. She started the business as a house cleaning
service and obtained clients by word of mouth. Id. at 68a. She would go to see a
house, talk to the customer, assess a price, and offer the job to one of her cleaners.
Id. The cleaners did not work for her on a full-time basis, and they did not have to
take an offered job. Id. They would let her know their schedule on a weekly basis
and she would offer them jobs that fit their availability. Id. She charged customers
a flat fee for cleaning and the cleaner would get a share of that charge; customers
did not know how much of a job would be her fee and how much went to the cleaner.
Id. at 69a & 117a-18a. Customers were to provide cleaning supplies although the
cleaners could bring their own if they wanted. Id.
              Goldstein did not train her cleaners, go on cleaning jobs with them, or
review their work after it was done. R.R. at 69a & 71a. She emphasized that her
cleaners were experienced and “good in the industry” and that if she got a complaint
from a customer, “the girls have to take care of it. They’ll go back. If a customer
calls and says, ‘You know, she missed this.’ I say, ‘okay,’ and I call [the cleaner]
and say, ‘You’ve got to go back,’ and they do.”           Id.   She did not provide
transportation or phones and the cleaners did not stop in her office or check in with
her before or after jobs. Id. at 70a-71a. They could reschedule with the customer
without checking with her. Id. at 70a. They paid their own taxes. Id. Their hours
and days of the week varied as needed. Id. Goldstein did not provide them with
uniforms but asked them to “dress appropriately” when they did jobs for her. Id. at
71a. She stated that most of her cleaners also did cleaning work for other customers

                                          3
outside of her arrangements with them, but she did not know if they advertised. Id.
at 72a & 107a.
             On cross-examination, Goldstein explained that for her cleaning
customers, she took 10%-20% of the total charge. R.R. at 75a & 106a. For example,
she might charge the customer $100, of which the cleaner would get $80, and she
would get $20. Id. at 76a. She reiterated that her cleaners could say no when she
offered them a job and that they liked the freedom of the arrangement. Id. The
customers usually paid the cleaner at the time of the job, but if they didn’t, she would
follow up with a phone call or an email to the customer; she would send a bill if
necessary. Id. at 77a. Some customers would give the cleaner a check and the
cleaner would bring it and other customer checks to her office once a week; she
would add up the receipts and pay the cleaners. Id. at 78a. She also received cash
and electronic checks from customers’ bank accounts. Id. at 79a.
             Goldstein stated that customers’ rates for cleaning and the cleaners’ rate
or percentage of the charged amount remained the same; she kept a chart of that
information but did not have it with her at the hearing. R.R. at 81a-82a. If a customer
built an addition to their house or got a pet that created more work for the cleaners,
she would talk to the customer and either increase the charge or lessen the cleaner’s
duties for the same charge as before. Id. at 83a. Cleaners could tell her if they
thought she should increase a customer’s charge and could opt out of doing that job
if Goldstein was unable to raise the charge. Id. at 102a-03a. Cleaners could keep
tips from customers. Id. at 84a. Goldstein got Social Security numbers from all her
cleaners, who came to her by word of mouth from her current cleaners; she did not
advertise for cleaners to come work for her. Id. at 90a. Sometimes cleaners would

                                           4
put up fliers and get their own responses and potential clients, then reduce their
availability for her to send them to her customers. Id. at 91a.
             Regarding Employer’s construction work, Goldstein stated that some
cleaning customers would ask her if she knew anyone able to do painting, window
washing, hanging pictures and window treatments, and carpet cleaning. Id. at 68a
& 72a. She knew individuals with those skills already and connected them with her
cleaning customers. Id. She did not set those prices, schedule the work, or supervise
the workers. Id. at 68a. Instead, she took a “limited finder’s fee” after the job was
done and paid for by the customer; she considered herself a “concierge” providing
her clients with whatever they needed that she was able to provide for them. Id. at
68a. If a customer did not pay the worker directly for home improvement services,
she would send the customer a bill and once it was paid, she would send the worker
the money after taking out her percentage for the referral. Id. at 72a-73a. The
workers usually told her how much of the total would be her fee for the referral. Id.
at 120a-21a. She recalled no disputes over that amount or any instance where a
worker went behind her back to avoid paying her fee; she figured they had the right
to do that, but they wanted to keep good relations with her for future referrals. Id.
             Goldstein testified that the individuals she referred to her customers for
construction or renovation jobs worked for themselves; they had limited liability
companies (LLCs) or corporations, carried their own insurance, and had their own
vehicles, supplies, and tools. R.R. at 73a. She did not supply anything to them,
supervise them, or review their work, but they knew she expected them to do good
work for her customers. Id. at 74a-75a. If she got a complaint from a customer, she
would immediately call the worker about it and the worker would take care of the
problem with the customer. Id. at 75a & 93a.

                                          5
             On cross-examination, Goldstein stated that her referral fee for
construction services was usually 10%-15% of the total charge. Id. Sometimes her
customers paid the workers directly but sometimes they sent her a check for the work
because she made the referral and they felt more comfortable paying her; she would
pay the worker out of that amount, less her fee. Id. at 87a & 112a-13a. She obtained
the workers’ Social Security numbers, federal employer identification numbers
(FEIN), and copies of insurance certificates but admitted she had not provided those
certificates to the Department during the audit process. Id. at 89a & 94a. She had
signed contracts with some of them, which had been provided to the Office during
the audit, but not with others if she issued them a 1099 tax form or if they had their
own LLC or corporation. Id. at 89a, 93a & 100a. Some of the workers she used
advertised and had social media sites, but she had longstanding relationships with
most of them based on having used them herself or by word-of-mouth referrals. Id.
at 92a. If one of the workers broke something at the customer’s house, she worked
with the individual and customer to fix or replace it. Id. at 94a. She did not have
an exclusive relationship with these workers, and they did not work for her at set
times. Id. at 95a.
             Goldstein acknowledged that although the construction workers did
their own estimates, she would sometimes handle the arrangements with the
customer because of her established relationship with both sides. R.R. at 115a &
119a. The arrangements were mostly informal and particular to each transaction and
the relationship she had with that worker. Id. She asked the workers to let her know
when a job was done so she could either take it off of her “to do” list or follow up if
anything else was needed. Id. at 123a-24a. Although she previously stated that she
thought the workers had the right to agree separately with a customer in order to

                                          6
avoid paying her fee, she acknowledged that at least one contract had a clause
forbidding the worker from pursuing her customers independently. Id. at 122a.
            The hearing concluded with brief closing arguments by the parties, who
agreed that the matter could be decided on the evidence in lieu of briefing. R.R. at
125a-33a. The Department issued its final decision and order under the signature of
Executive Deputy Secretary Robert V. O’Brien on March 26, 2021. Dep’t Decision;
C.R. #24. The Department concluded that 37 individuals (27 cleaners and 10
construction workers) were paid by Employer for services performed; therefore, a
presumption of employment attached, and the burden shifted to Employer to prove
that those individuals were independent contractors. Id. at 17. The Department
analyzed   the   construction   workers       under   the   Construction   Workplace
Misclassification Act, Act of October 13, 2010, P.L. 506, 43 P.S. §§ 933.1-933.17
(CWMA), and the cleaners under the UC Law and ultimately concluded that
Employer failed to establish that the 37 individuals were independent contractors.
Id. at 27. Employer’s petitions for reassessment were therefore denied and it was
deemed liable for the assessments as set forth in the November 2016 notices. Id.
Employer timely appealed to this Court.

                                    II. Issues
            Employer first argues that the Department erred in applying the CWMA
to the 10 construction workers because Employer is not in the business of
construction as required by the CWMA. Employer’s Br. at 11. Employer also
argues that the Department erred in weighing the evidence to reach the conclusion
that under the UC Law, the 27 cleaners at issue here were employees rather than
independent contractors. Id.

                                          7
                                      III. Discussion
              Section 301 of the UC Law requires employers to pay contributions into
the UC system based on their employees’ wages. See 43 P.S. § 781(a)(1).3 The UC
Law defines “employment” as “all personal service performed for remuneration by
an individual under any contract of hire, express or implied, written or oral, including
service in interstate commerce, and service as an officer of a corporation.” Section
4(l)(1) of the UC Law, 43 P.S. § 753(l)(1). “Once the Department shows that an
individual is performing services for wages, as that term is defined under the [UC
Law], the burden shifts to the taxpayer to bring itself within an exception” that would
relieve the employer of having to pay contributions. A Special Touch v. Dep’t of
Lab. & Indus., 228 A.3d 489, 503 (Pa. 2020) (quotation marks omitted). Employer
contributions are a tax and therefore are to be construed in the employer’s favor, but
the burden of disproving an individual’s employee status is heavy.                     Jia v.
Unemployment Comp. Bd. of Rev., 55 A.3d 545, 548 (Pa. Cmwlth. 2012); Gulf & W.
Corp. v. Dep’t of Lab. & Indus., Off. of Emp. Sec., 459 A.2d 1369, 1371 (Pa. Cmwlth.
1983).
              The relevant exception in both issues raised by Employer is whether an
individual is an independent contractor as opposed to an employee. Subsection
4(l)(2)(B) of the UC Law states that an employer seeking to establish that an
individual who has performed services for remuneration is an independent contractor
must show 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

       3
          This Court’s scope of review determines whether the necessary findings of fact are
supported by substantial evidence, whether the Department committed an error of law, or whether
constitutional rights were violated. Victor v. Dep’t of Lab. & Indus. Bureau of Tax Operations,
647 A.2d 289, 291 n.1 (Pa. Cmwlth. 1994).
                                              8
service and in fact; and (b) as to such services such individual is customarily engaged
in an independently established trade, occupation, profession or business.” 43 P.S.
§ 753(l)(2)(B). The employer must establish both factors, and whether it has done
so is a question of law subject to our review. Tobey-Karg Sales Agency, Inc. v. Dep’t
of Lab. & Indus., 34 A.3d 899, 903 (Pa. Cmwlth. 2011).

                          A. Applicability of the CWMA
             The UC Law includes a general provision to guide in determining
whether an individual is an employee or independent contractor. If, however, the
services rendered involve construction, then a preliminary determination must be
made as to whether the more specific CWMA applies. In enacting the CWMA, “the
legislature clearly intended to combat the deceptive business practice of classifying
employees as independent contractors so as to avoid the expenses and
responsibilities attending the employment relationship[.]” Dep’t of Lab. & Indus. v.
Workers’ Comp. Appeal Bd. (Lin & E. Taste), 187 A.3d 914, 924 (Pa. 2018) (Eastern
Taste).
             Section 2 of the CWMA defines an “employer” for its purposes by
reference to the definition of “employer” in the UC Law. See 43 P.S. § 933.2. The
UC Law defines an “employer” broadly:
             “Employer” means the Commonwealth of Pennsylvania,
             its political subdivisions, and their instrumentalities and
             every individual, copartnership, association, corporation
             (domestic or foreign) or other entity . . . who or which
             employed or employs any employe in employment subject
             to this act for some portion of a day during a calendar
             year, or who or which has elected to become fully subject
             to this act, and whose election remains in force.

43 P.S. § 753(j)(2) (emphasis added).

                                          9
             In Eastern Taste, our Supreme Court considered when a business will
be considered an employer for purposes of the CWMA. The Court distinguished
between entities that are truly in the “construction industry” and subject to the
CWMA (and, by extension, UC and workers’ compensation laws) and entities that
are only situationally or casually involved in the construction industry, such as, in
that case, a restaurant that hired workers to perform remodeling work. The Court
concluded:
             [W]hen determining whether the CWMA is applicable to
             the situation at hand, the construction activity must be
             analyzed and considered in the context of the putative
             employer’s industry or business.         Specifically, in
             confining its applicability to individuals who perform
             services “in the construction industry,” [Section 3 of the
             CWMA,] 43 P.S. § 933.3(a), the CWMA refers only to
             those individuals who work for a business entity that
             performs construction services, namely “[e]rection,
             reconstruction, demolition, alteration, modification,
             custom fabrication, building, assembling, site preparation
             and repair work.” 43 P.S. § 933.2. Stated otherwise, the
             CWMA is inapplicable where the putative employer is not
             in the business of construction.

187 A.3d at 926 (emphasis added, some citations and quotation marks omitted).
Concluding that the restaurant was not in the construction industry, the Court held
that the injured worker was an independent contractor and therefore not eligible for
workers’ compensation benefits. Id.
             Employer asserts that it is not in the construction industry. Employer’s
Br. at 13-16. Relying on Eastern Taste, Employer explains that, like the restaurant
there, it is involved in construction work only situationally or casually, in this
instance via the referrals Goldstein provides to her clients. Id. The Office responds
that, given Goldstein’s admittedly active and ongoing role in providing her clients

                                         10
with individuals who perform construction services, Employer placed itself squarely
within the construction business, such that the CWMA is applicable. Office’s Br. at
18-26.
              The Department’s final decision did not specifically address the issue
Employer raises: whether as a threshold matter, Employer is engaged in the
“construction industry.”4 However, its determination that the individuals were
employees pursuant to the CWMA reflects a tacit conclusion that based on the record
before it, Employer is in the construction industry. Goldstein testified that Employer
began as a house cleaning company, but when clients asked her if she knew anyone
able to perform construction-type services in their houses such as flooring, painting,
and hanging window treatments, she connected them with individuals she knew who
did that kind of work.5 R.R. at 68a & 72a. She did not accompany the individuals
to the customers’ homes, conduct or assist with their price estimations, or supervise
the work, and she received a referral fee of about 10%-15% of the job charge, as
determined and paid by the individual who did the work. Id. at 68a.
              However, Goldstein also involved herself actively with customers by
serving as a go-between for communications with the individuals doing the work,
billing the customers, and receiving their payment directly, which she then paid to
the individual, less her referral fee. R.R. at 72a-73a, 87a & 112a-19a. She also made
the workers aware of her expectations that their work for her customers would be
performed at a high level of quality, and if she got a complaint from a customer, she
would call the worker and address the problem herself. Id. at 74a-75a & 93a-94a.

       4
          The issue was not waived because Employer’s counsel raised it in his closing statement
at the hearing. R.R. at 130a.

       5
          There is no dispute that the services in question fall within the ambit of the CWMA’s
definition of “construction.” See 43 P.S. § 933.2.
                                              11
She also asked the workers to let her know when a job was done so she could either
take it off her “to do” list or follow up if anything might be needed. Id. at 123a-24a.
             The foregoing record evidence supports the Department’s implicit
conclusion that Employer “performs services in the construction industry” such that
the employment status of the workers here may be evaluated under the CWMA (see
below). The putative employer in Eastern Taste was a restaurant and therefore
obviously not in the construction industry per se. The construction work it hired for
was a situational need so that it could perform its normal and usual services: cooking
and serving food to restaurant customers. Here, by contrast, Employer “performed
services in the construction industry” by actively providing its house cleaning clients
with construction workers on request. Although Employer was not involved with
the actual work or pricing, its level of engagement with that work was higher and
more comprehensive than mere informal referrals. Depending on the customer and
circumstances, Goldstein involved herself in billing, receiving customer payments,
paying the individuals, and communicating with the customers on an ongoing basis,
including addressing and managing customer complaints. She also expected certain
quality standards for the work performed by those individuals and asked them to
report to her when they finished a job so that she could clear it off her “to do” list or
follow up if anything further was needed.
             Employer’s involvement was not as a construction customer otherwise
involved in a non-construction business, like the restaurant in Eastern Taste. It held
itself out as able to provide individuals to perform construction services, or at least
was known as such by its residential customers and involved itself in the work well
past the referral stage. The concerns expressed in Eastern Taste are not at issue here,
specifically that too broad an application of the CWMA would overly burden plainly

                                           12
non-construction businesses and private homeowners (like Employer’s residential
customers, but not like Employer itself) who hire workers for construction and
renovation projects. The Department’s implicit conclusion that Employer was “in
the business of construction,” even though it did not directly perform construction
services, and that the CWMA applies in this case, was therefore supported by
substantial evidence and did not constitute legal error.

     B. Application of the CWMA to Employer’s Construction Workers
             Having determined that the CWMA applies, we next review the
Department’s conclusion that the workers Employer provided to its clients for
construction services were its employees for purposes of subjecting Employer to
required UC contributions. The CWMA states:
             (a) General rule.--For purposes of workers’ compensation,
             unemployment compensation and improper classification
             of employees provided herein, an individual who performs
             services in the construction industry for remuneration is an
             independent contractor only if:
                   (1) The individual has a written contract to perform
                   such services.
                   (2) The individual is free from control or direction
                   over performance of such services both under the
                   contract of service and in fact.
                   (3) As to such services, the individual is customarily
                   engaged in an independently established trade,
                   occupation, profession or business.
             (b) Criteria.--An individual is customarily engaged in an
             independently established trade, occupation, profession or
             business with respect to services the individual performs
             in the commercial or residential building construction
             industry only if:

                                          13
      (1) The individual possesses the essential tools,
      equipment and other assets necessary to perform the
      services independent of the person for whom the
      services are performed.
      (2) The individual’s arrangement with the person
      for whom the services are performed is such that the
      individual shall realize a profit or suffer a loss as a
      result of performing the services.
      (3) The individual performs the services through a
      business in which the individual has a proprietary
      interest.
      (4) The individual maintains a business location that
      is separate from the location of the person for whom
      the services are being performed.
      (5) The individual:
            (i) previously performed the same or similar
            services for another person in accordance
            with paragraphs (1), (2), (3) and (4) while
            free from direction or control over
            performance of the services, both under the
            contract of service and in fact; or
            (ii) holds himself out to other persons as
            available and able, and in fact is available and
            able, to perform the same or similar services
            in accordance with paragraphs (1), (2), (3)
            and (4) while free from direction or control
            over performance of the services.
      (6) The individual maintains liability insurance
      during the term of this contract of at least $50,000.
(c) Factors not to be considered.--The failure to withhold
Federal or State income taxes or pay unemployment
compensation contributions or workers’ compensation
premiums with respect to an individual’s remuneration
shall not be considered in determining whether the

                            14
               individual is an independent contractor for purposes of the
               Workers’ Compensation Act[6] or the [UC] Law.
                                              ....
               (e) Unemployment compensation.--
                       (1) For purposes of section 4(l)(2)(B) of the [UC]
                       Law, an individual is customarily engaged in an
                       independently established trade, occupation,
                       profession or business with respect to services the
                       individual performs in the construction industry
                       only if the criteria in subsection (b) are satisfied.
                       (2) Except as provided in paragraph (1), nothing in
                       this act shall be construed to affect any exclusion
                       from “employment” as defined in the [UC] Law.

43 P.S. § 933.3. The CWMA’s independent contractor criteria are “mandatory, and
the absence of any one criterion will negate the independent contractor status, and
the individual will be deemed an employee.” D & R Constr. v. Workers’ Comp.
Appeal Bd. (Suarez), 167 A.3d 837, 844 (Pa. Cmwlth. 2017). As noted, there is no
dispute that the individuals at issue here performed construction work at Employer’s
clients’ homes, as defined by the CWMA. See 43 P.S. § 933.2.
               In the context of determining whether a worker performing
construction services is an employee or an independent contractor, the CWMA
adopts the general aspects of the UC Law. See 43 P.S. § 933.3(e). Therefore, the
Office bore the initial burden to establish that the individuals at issue here were
performing construction services for remuneration by Employer, at which point the
burden would shift to Employer to establish that the individuals were independent
contractors and that it was therefore exempt from UC contributions. A Special
Touch, 228 A.3d at 503. As noted, employers’ UC contributions are a tax and

      6
          Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710.

                                               15
therefore to be construed in the employer’s favor; nevertheless, the burden of
disproving an individual’s status as an employee is a heavy one. Jia, 55 A.3d at 548;
Gulf & W. Corp., 459 A.2d at 1371.
             The Department first concluded that Employer paid 10 individuals for
construction work, which Employer did not dispute. Dep’t Decision at 17. The
burden then shifted to Employer to establish that those individuals were independent
contractors. Id. The Department evaluated the record evidence for each of the
enumerated CWMA factors and concluded that Employer had not met that burden.
Id. at 19-21. Employer maintains that the individuals were independent contractors
outside of its direction and control, not employees. Employer’s Br. at 13-16. The
Office responds that Employer failed to meet its burden to show independent
contractor status and that the Department correctly assigned employment status to
the individuals. Office’s Br. at 18-22.
             The first factor of the CWMA independent contractor test requires the
employer to have a written contract with the disputed individuals that reflects mutual
intent to create an independent contractor relationship. 43 P.S. § 933.3(a)(1). Here,
the Department correctly found that of the 10 individuals paid by Employer for
construction services, Employer provided written contracts with only 3 of them, the
remaining 7 were therefore still potentially employees. Dep’t Decision at 19; C.R.
#16.
             The second factor Employer must show is that the individuals were free
from control or direction over the work performed “both under the contract of service
and in fact.” 43 P.S. § 933.3(a)(2) (emphasis added). The Department concluded as
fact that Employer did not control or direct any of the workers. Dep’t Decision at
19; see also R.R. at 68a & 73a-75a. The Department noted, however, that as to the

                                          16
seven individuals without contracts, Employer could not fully establish this point.
Dep’t Decision at 19-20.
             The third CWMA factor required Employer to establish that the
individuals were “customarily engaged in an independently established trade,
occupation, profession or business.”       43 P.S. § 933.3(a)(3).      In turn, that
determination required Employer to show that all 10 individuals met all 6
enumerated requirements listed above: ownership of their tools and equipment; the
individuals would suffer a profit or loss with regard to performing the work, i.e.,
they were not paid regular wages whether they did the work or not; they performed
the work through a proprietary business; a business location separate from the
location of the work performed; performed similar services for another customer and
did so free of Employer’s control or direction or held themselves out publicly as
performing this kind of work free of Employer’s direction; and maintained at least
$50,000 in liability insurance. 43 P.S. § 933.3(b).
             The Department concluded that Employer had not provided proof of
insurance for any of the 10 individuals it paid for construction services. Dep’t
Decision at 20. Goldstein testified that the construction workers she provided to her
clients had their own businesses and carried their own insurance, and that she
required them to provide her with proof of insurance when she connected them with
her clients. R.R. at 73a & 89a. Employer admitted, however, that it had not provided
any insurance documentation to the Office during the audit, although it did provide
other documentation such as copies of the contracts it had with certain workers. Id.
at 94a.
             The Department clearly found Goldstein’s testimony alone, without
documentary proof of her construction workers’ insurance, insufficient to meet the

                                         17
heavy burden of rebutting employment status in the CWMA context. We agree. In
Hawbaker v. Workers’ Compensation Appeal Board (Kriner’s Quality Roofing
Services), 159 A.3d 61 (Pa. Cmwlth. 2017), this Court held that as applied to a
workers’ compensation claimant, who bore the burden in that context to establish
employee status pursuant to the CWMA, the record included the claimant’s
insurance application that identified his business. Id. at 66. Although the claimant’s
insurance had lapsed at some point, the fact that he possessed it in the first place
supported the finding that he was an independent contractor. Id. at 71.
               Here, by contrast, Employer had the burden to establish independent
contractor status for the 10 individuals it paid for construction services. Although
Goldstein testified that these workers carried their own insurance and that she
required them to provide her with certification, she admittedly did not provide that
documentation to the Office during the audit process or at the hearing. R.R. at 94a.
Moreover, the hearing officer stated at the close of the hearing that the record would
be kept open for 40 days for the parties to resolve the status of “certain workers who
may not be in dispute any longer[.]” Id. at 130a-31a. Employer therefore had the
opportunity before, during, and after the hearing to prove that the 10 individuals at
issue carried insurance, and it failed to do so.
               In the CWMA context, all factors are “mandatory, and the absence of
any one criterion will negate the independent contractor status, and the individual
will be deemed an employee.” D & R Constr., 167 A.3d at 844. Given the above
discussion, the Department’s conclusion that Employer failed to establish all of the
factors necessary to prove independent contractor status with regard to those 10
individuals was therefore supported by substantial evidence and did not constitute
legal error.

                                           18
       C. Application of the UC Law to Employer’s Cleaning Workers
             Because 27 of the individuals in question here were cleaning personnel
not engaged in construction work for or on behalf of Employer, their employment
status is analyzed under Section 4(l)(2)(B) of the UC Law, which requires an
employer seeking to establish that an individual who has performed services for
wages is an independent contractor to show 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.” 43 P.S. § 753(l)(2)(B). The employer must
establish both factors, and whether it has done so is a question of law subject to our
review. Tobey-Karg Sales Agency, Inc., 34 A.3d at 903.
             The Department concluded that Employer had established that the 27
workers it paid for cleaning services at its clients’ houses were not within its control
or direction in terms of the actual work performed, and the Office has not disputed
that conclusion as to the first part of the test. Dep’t Decision at 21-24. However,
Employer was also required to establish with record evidence that the workers were
“customarily engaged in an independently established trade, occupation, profession
or business” as cleaners outside of their work for Employer. Jia, 55 A.3d at 549.
             The test for this element requires consideration of three factors: “(1)
whether the individuals are able to work for more than one entity; (2) whether the
individuals depended on the existence of the presumed employer for ongoing work;
and (3) whether the individuals were hired on a job-to-job basis and could refuse any
assignment.” Minelli v. Unemployment Comp. Bd. of Rev., 39 A.3d 593, 596 (Pa.
Cmwlth. 2012). Unlike the CWMA, the analysis is based on a totality of the

                                          19
circumstances rather than a need to satisfy all three criteria. Tobey-Karg Sales
Agency, Inc., 34 A.3d at 908.
            Whereas this test pertains largely to the nature and practical operation
of an individual’s outside or independent business outside of the putative employer,
Section 4(l)(2)(B) also requires proof that the individual is actually “customarily
engaged” in such a business, as opposed to performing de minimis outside activities
on an isolated or sporadic basis: “the fact that an unemployed person agrees to
accept, and thereafter does accept, an occasional offer of work is simply not enough
to demonstrate that said individual is customarily engaged in an independently
established trade, occupation, profession or business.” Minelli, 39 A.3d. at 597-98
(quoting Silver v. Unemployment Comp. Bd. of Rev., 34 A.3d 893, 898 (Pa. Cmwlth.
2011)). In Minelli, this Court explained that requiring an employer to show that an
individual is customarily engaged in their own independent business is not a
departure from the three-part test but is required based on the statute’s express
language. Id. at 598. Subsequently, our Supreme Court refined the analysis for
determining whether an individual is “customarily engaged” in an outside
independent business:
            [W]e read Subsection (4)(l)(2)(B) to be unambiguous in
            requiring a putative employer to show that an individual is
            actually involved in an independent trade, occupation,
            profession, or business in order to establish that the
            individual is self-employed under the second prong of
            Subsection (4)(l)(2)(B).
                                       ....
            In this respect, we agree with the Department that
            circumstances demonstrating that an individual is actively
            holding himself out to perform services for another, such
            as through the use of business cards or other forms of
            advertising, even if not actually performing those services

                                        20
             during a particular time period at issue, are also relevant
             to the analysis.

A Special Touch, 228 A.3d at 503-04. The Supreme Court has noted, however, that
these cases are highly fact-intensive and that no single factor is controlling. Id. at
505; see also Danielle Viktor, Ltd., v. Dep’t of Lab. & Indus. Bureau of Emp. Tax
Operations, 892 A.2d 781, 791 (Pa. 2006).
             Here, the Department concluded that Employer had provided some
evidence to support the first and third elements of the test, primarily Goldstein’s
testimony that the 27 cleaning workers could and did work for other cleaning
companies or clients and could refuse work offered to them by Employer. Dep’t
Decision at 26-27. However, the Department further concluded that Employer had
not shown that the workers did not depend on Employer for ongoing work (the
second element). Id. Relying on Minelli, the Department ultimately decided that,
in light of Employer’s evidence as a whole and the totality of the circumstances,
Employer had not shown that the 27 cleaning workers at issue were independent
contractors “customarily engaged” in their own cleaning businesses. Id. Employer
notes that Goldstein’s testimony on this issue was unrebutted and states: “While
conceding that [Employer’s] evidence was not the strongest it was more than
sufficient to show that the cleaners all had their own businesses.” Employer’s Br. at
19-20. The Office responds that the Department’s decision was correct on this issue
and that Employer simply failed to meet its burden. Office’s Br. at 26-27.
             Goldstein testified that she got her cleaners by personal reference or
word of mouth, not because she saw any advertisements from them. R.R. at 90a.
She stated that to her knowledge, most of her cleaners also did cleaning work for
other customers outside of her arrangements with them. Id. at 72a. She also knew
that some cleaners would put up fliers and if they got their own potential clients,

                                         21
they would reduce their availability for her clients. Id. at 91a. She did not know,
however, if they advertised more formally. Id. at 91a & 107a-08a.
             We agree with the Department that Employer’s evidence (again,
primarily Goldstein’s testimony) established that the cleaners were able to work for
other clients and could decline jobs offered to them and that Employer did not
establish that her cleaners were not dependent on working for her. However,
Employer also had to show that the cleaners were actually and “customarily
engaged” in their own cleaning businesses. Employer was aware of this burden as
of the November 2016 assessment notices and had until the November 2018 hearing
and at least 40 days thereafter, during which time the hearing officer kept the record
open for Employer to produce record evidence in support of its position and to meet
its heavy burden. See R.R. at 130a-31a.
             As discussed, Employer’s evidence could be said to meet the three-part
test to show that at least some or even most of the 27 cleaning workers at issue
engaged in independent cleaning activities outside of Employer’s business.
However, we agree with the Department that Employer’s evidence is insufficient to
establish that the 27 cleaning workers were actually and “customarily engaged” in
these outside pursuits. As our Supreme Court pointed out in A Special Touch,
“Black’s Law Dictionary defines the word ‘customarily’ to mean ‘usually,
habitually, according to the customs; general practice or usual order of things;
regularly.’” 228 A.3d at 503 (quoting Black’s Law Dictionary 385 (6th ed. 1990)).
Employer’s evidence establishes only that some of the cleaners at issue put out fliers
at times to solicit business from other potential cleaning customers, but not that they
did so usually, habitually, or regularly. We reiterate that an employer’s burden to
show independent contractor status and overcome the presumption of employment

                                          22
is heavy and that Employer had several years before the hearing and 40 days after it
to develop more substantial record evidence of its cleaners’ outside cleaning
activities than it ultimately provided. Given Employer’s failure to do so, we
conclude that the Department’s determination that Employer failed to establish that
the 27 cleaners at issue were independent contractors was supported by substantial
evidence of record and did not constitute legal error.

                                  IV. Conclusion
             Considering the foregoing discussion, the Department’s order denying
Employer’s petitions for reassessment of Employer’s required UC contributions is
affirmed.

                                       ___________________________________
                                       CHRISTINE FIZZANO CANNON, Judge

                                         23
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Linda’s Cleaning Consultants, Inc.,      :
                  Petitioner             :
            v.                           :
                                         :
Department of Labor and Industry,        :
Office of Unemployment                   :
Compensation Tax Services,               :   No. 457 C.D. 2021
                 Respondent              :

                                      ORDER

            AND NOW, this 18th day of January 2024, the March 26, 2021, final
order of the Department of Labor and Industry is AFFIRMED.

                                       ___________________________________
                                       CHRISTINE FIZZANO CANNON, Judge