Quigley v. Unemployment Comp. Bd. of Review

• Decision Date: 17 November 2021
• Docket Number: No. 20 EAP 2020,20 EAP 2020
• Citation: 263 A.3d 574
• Parties: Caitlin QUIGLEY, Appellee v. UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, Appellant
• Court: Pennsylvania Supreme Court

263 A.3d 574

Caitlin QUIGLEY, Appellee

v.UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, Appellant

No. 20 EAP 2020

Supreme Court of Pennsylvania.

Argued: March 9, 2021

Decided: November 17, 2021

Colleen Theresa Reilly, Janet Marie Tarczy, Esqs., Pennsylvania Unemployment Compensation Board of Review, for Appellant.

Julia Sarah Simon-Mishel, Esq., Public Benefits Unit, Aaron Michael Sommer, Esq., Philadelphia Legal Assistance, for Appellee.

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE TODD

In this appeal, we consider whether Appellant, the Unemployment Compensation Board of Review ("Board"), erred in reversing the award of unemployment compensation ("UC") benefits to Appellee Caitlin Quigley ("Claimant") by sua sponte concluding she was ineligible for such benefits, where the issue of her eligibility was not raised in her appeal to the Board or below. After careful review, we determine that the Board did err, and, consequently, we affirm the decision of the Commonwealth Court, which reversed the Board's ruling and remanded.

I. Factual and Procedural Background

On April 7, 2017, Claimant was laid off from her job as the Director of Communication and Development of a Philadelphia area nonprofit service corporation. As a result, she applied for UC benefits with the Indiana County Unemployment Service Center ("service center") operated by the Department of Labor and Industry ("Department"). In the questionnaire accompanying her application for benefits, she noted that she had been engaged in a "sideline business"¹ since 2015, which involved providing writing and editing services on a freelance basis to another nonprofit corporation, the Bread & Roses Community Fund. Claimant Questionnaire, 4/11/17 (R.R. at 6).² Claimant also indicated in the questionnaire that she anticipated a reduced income in 2017 from these activities, and she attached to the questionnaire, pursuant to its instructions, a copy of Schedule C of her 2016 federal tax return showing the income she had received from this sideline business during that year. At the time of her application for benefits, Claimant notified the service center, as noted in its records, that her phone would be disconnected for three weeks, and she indicated that the center should contact her by email. Unemployment Service Center Claim Record, 4/17/21 (R.R. at 3).

On April 12, 2017, the service center issued a "Notice of Determination," in which it ruled that Claimant was eligible to receive UC benefits, finding:

Claimant did work in regular employment while engaged in the self-employment and the Claimant's regular earnings exceeded the net profit from the self-employment. ... Claimant did not substantially increase her involvement in the self-employment following the loss of her regular employment and the Claimant is able and available for full-time work. As such, the Claimant's business qualifies as a sideline business and benefits are allowed under [ Section 802(h) ] of the [UC] Law. The Claimant's prorated earnings of $237.00 from the sideline business are deductible from her weekly benefit amount.

Notice of Determination, 4/12/17, at 1 (R.R. at 13).

After receipt of this decision, Claimant considered the amount of prorated income attributed to her sideline business (and deducted from her benefits) to be too high. Consequently, proceeding pro se , she filed a petition for appeal with the Department in which she explained the basis for her challenge:

I believe that your determination overestimated the amount of income I will have from my sideline business. In my schedule C for 2016, it reflected a lot of 1099 income for two reasons: 1) before April 1, 2016, I worked on 1099 for the Philadelphia Area Cooperative Alliance for 30 hours a week and 2) I did a lot more work overall last year in my sideline business for Bread & Roses than I anticipate doing this year. My total income from my sideline business this year will be approximately $2,000. Please reconsider your determination based on this information. I understand that it makes sense to prorate it, but the sideline business is not a significant source of income for me.

Attachment 2B to Petition for Appeal, 4/18/17 (R.R. at 19) (emphasis deleted).

The Department scheduled a hearing before a referee³ from the Philadelphia Referee Office on May 9, 2017 and provided Claimant with written notice of it. The notice indicated that the issue to be considered in the appeal was "[w]hether claimant is engaged in self-employment." Notice of Hearing, 4/26/17 (R.R. at 22). On April 30, 2017, Claimant sent an email to the referee's office requesting the hearing be continued until after May 25, 2017, and indicating that email was the best way to reach her. Email, 5/1/17 (R.R. at 32). The office did not reply to the email, but, instead, a representative called Claimant's phone number, which she had previously informed the Department was disconnected, and he left a voice message on Claimant's voicemail stating that the request for postponement was denied. Claimant avers that, because her phone service was disconnected at the time the message was left, she could not access her voicemail — a fact her recorded voicemail greeting purportedly relayed; thus, it was only on May 25, 2017, when her service was reconnected, that she first learned of the denial of the continuance. Petition for Reconsideration, 8/18/17 (R.R. at 55).

The hearing before the referee took place, as scheduled, on May 9, 2017, without Claimant in attendance. The Department did not participate in the hearing. In her decision, the referee described the issue which she considered in the hearing as "Is the claimant's income from self-employment deductible from UC, and, if so, to what extent?" Referee's Decision, 5/11/17, at 2 (R.R. at 40). The referee also noted that the service center had determined that Claimant's sideline business did not disqualify her from receiving benefits under Section 802(h) ; thus, the referee viewed the extant issue as "whether income from it is deductible from UC." Id.

Using data from her 2016 federal income tax return which she had attached to her questionnaire, the referee applied the relevant Department regulation, 34 Pa. Code § 65.121, to compute the weekly prorated income from Claimant's sideline business (which was thus required to be deducted from her UC benefits) as $228.34, instead of the Department's calculation of $237.00.

After receiving the referee's decision, which was sent by regular United States Mail to Claimant, she, again proceeding pro se , responded by filing a petition for appeal with the Board. In that petition, Claimant provided the following reason for her appeal:

You are calculating my benefits based on my 2016 sideline business earnings, but I expect my 2017 sideline business earnings to be approximately $3,100 for the year, which is significantly lower than the amount shown on my 2016 Schedule C, which showed $11,784.00 in income. This is because I was paid as a 1099 contractor for my full-time work with the Philadelphia Area Cooperative Alliance between January 1 and March 31 of 2016 and then was converted into a W2 employee on April 1, 2016. My sideline business only has one client, Bread & Roses Community Fund, and I anticipate approximately $3,100 in earnings for 2017. Please calculate my reduction based on the $3,100 number and not the $11,784 number. My year-to-date sideline business income is $1,539 and I have done exactly half of the work I anticipate performing this year for the sideline business.

Attachment 1 to Petition for Appeal, 5/17/17 (R.R. at 49).

The Board did not conduct a hearing, but, instead, issued a decision on August 8, 2017 in which it ruled that Claimant was ineligible for benefits under Section 802(h). In its written adjudication, the Board did not accept the determinations of the Department or the referee that Claimant's freelance work qualified as a sideline business, but instead proceeded to apply the four-part test set forth above, see supra note 1, for determining whether a self-employment activity disqualifies a claimant from receiving UC benefits. In applying this test, the Board ruled:

The claimant concedes that she owned and operated an independent business, but failed to present competent evidence for the [Board] to conclude that she fit into the sideline activity exception because she failed to appear at the hearing in this matter.

In her appeal, the claimant takes issue with the calculation of the Referee. However, it was the claimant's burden to prove that she fell within the sideline business exception to self-employment before any calculation can be made. Therefore, the Board does not address the calculation of her prorated weekly deductible amount because she did not meet her initial burden.

Board Decision, 8/8/17, at 1-2 (R.R. at 51-52). Based on this rationale, the Board reversed the referee's decision and denied Claimant benefits.

Claimant filed a petition for reconsideration of the Board's decision in which she asserted that the reason she did not attend the referee hearing was because she was out of town, and did not receive the voicemail message from the referee's office that her request for a continuance was denied because her phone was not working. Claimant averred that she had informed the Department about her malfunctioning phone, and highlighted her voicemail greeting stating that she did not have the ability to receive voicemail; nevertheless, the referee's office did not email her about the denial, even though she had indicated this was the preferable way for her to receive communications, nor did it inform her of its decision in writing by regular mail. Claimant stated her belief that these circumstances constituted good cause for her nonappearance, and that, had she testified, she could have "cleared up the issue" of the earnings she received from her business, as well as established "that the work at issue was a side business and never my primary form...