Unemployment compensation — Unemployed businessman — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Substantial control over business.
1. A discharged employe, who owns capital stock in his corporate employer, is an officer of the corporation and serves on its board of directors, exercises a substantial degree of control over the corporate operation and is an unemployed businessman, ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897. [49-50]
OPINION BY JUDGE WILKINSON, December 29, 1976:
Claimant appeals from an order of the Unemployment Compensation Board of Review (Board) denying him benefits under Section 402(h) of the Unemployment Compensation Law. The Board, affirming the referee, found that claimant was an unemployed businessman and, thus, ineligible for benefits. We agree.
Act of December 5, 1936, Second Ex. Sess., P.L. 2897 (1937), as amended, 43 P. S. § 802(h) (disqualifies self-employed persons).
The record shows that claimant was the owner of one-quarter (1/4) of the capital stock of Trimen Industries, a Pennsylvania corporation engaged in manufacturing. He served as Secretary-Treasurer of the corporation and as a member of the Board of Directors. Claimant worked as a foreman for the corporation until he was involuntarily discharged for his refusal to take additional personal financial responsibility for a program of corporate expansion. Upon his discharge, claimant applied for unemployment compensation benefits.
This case falls squarely within the rule of Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972), despite claimant's efforts to distinguish it. In that case, the Pennsylvania Supreme Court held that unemployed businessmen are not eligible for unemployment compensation. Within the context of Section 402(h), a businessman is "one who through ownership of stock and his position in the corporation exercises a 'substantial degree of control' over its operation. . . ." Starinieri, supra, 447 Pa. at 259, 289 A.2d at 727. Claimant's ownership of one-quarter (1/4) of the capital stock and status as a corporate officer and member of the Board of Directors shows substantial control over the operation of the company. See Starr v. Unemployment Compensation Board of Review, 10 Pa. Commw. 265, 309 A.2d 837 (1973); Medoff v. Unemployment Compensation Board of Review, 9 Pa. Commw. 466, 308 A.2d 185 (1973).
Claimant mistakenly relies on Wedner Unemployment Compensation Case, 449 Pa. 460, 296 A.2d 792 (1972), for the proposition that the referee and Board should not have pierced the corporate veil to determine whether claimant was an unemployed businessman. The contention is without merit. It was made clear in Wedner, supra, and in our more recent case, Feltman v. Unemployment Compensation Board of Review, 15 Pa. Commw. 153, 325 A.2d 322 (1974), that Section 402(h) was not at issue; rather, each case dealt with Section 4(l)(4)(5), 43 P. S. § 753(l)(4)(5).
Accordingly, we will enter the following
ORDER
NOW, December 29, 1976, the order of the Unemployment Compensation Board of Review, Decision Number B-130143, filed February 25, 1976, is affirmed and claimant's appeal is dismissed.