| Matter of Wannen (Andrew Garrett Inc.\MCommissioner of Labor) |
| 2008 NY Slip Op 09501 [57 AD3d 1029] |
| December 4, 2008 |
| Appellate Division, Third Department |
| In the Matter of the Claim of Charles W. Wannen, Respondent. AndrewGarrett Inc., Appellant; Commissioner of Labor, Respondent. (And Another RelatedClaim.) |
—[*1] Andrew M. Cuomo, Attorney General, New York City (Dawn A. Foshee of counsel), forCommissioner of Labor, respondent.
Appeals from two decisions of the Unemployment Insurance Appeal Board, filed February 21,2007, which, among other things, ruled that Andrew Garrett Inc. is liable for additional unemploymentinsurance contributions on remuneration paid to claimant and others similarly situated.
Claimant was employed as a stockbroker at an office located in Nassau County, which wasoperated by a partnership formed by Mark Goetz and Edward Goetz. The partnership entered into acontractual relationship with Andrew Garrett Inc., a securities broker/dealer licensed by the NationalAssociation of Securities Dealers (hereinafter NASD), wherein brokers employed by the partnershipcould make stock trades under Garrett's license and Garrett would share in any commissions generatedby such trades.
After claimant resigned his position with the partnership in December 2005, he filed an applicationfor unemployment insurance benefits. The Unemployment Insurance Appeal Board ruled that claimantwas eligible to receive benefits and that Garrett, as claimant's employer, was liable for additionalunemployment insurance contributions on commissions it paid to claimant [*2]and other similarly situated stockbrokers. Garrett now appeals.
Whether an employment relationship existed between Garrett and claimant is a factual question forthe Board to decide and, if supported by substantial evidence, its determination will not be disturbed(see Matter of Concourse Ophthalmology Assoc. [Roberts], 60 NY2d 734, 736 [1983]). Thedetermination of such an inquiry will be based upon the degree of control exercised by the entity overclaimant's work (see id. at 736; Matter of Singh [Thomas A. Sirianni, Inc.—Commissioner of Labor],43 AD3d 498, 499 [2007]).
Here, the Board found that an employment relationship existed because Garrett paid commissionsto claimant, viewed his trades, provided claimant with business cards and stationery that bore Garrett'sname, address and phone number, required claimant to identify himself as being affiliated with Garrettwhen he communicated with clients, and agreed to assume the legal responsibility for claimant's badtrades. However, all of these actions relied upon by the Board were procedures that Garrett wascompelled to follow pursuant to regulations promulgated by NASD (see 15 USC §78o-3). Standing alone, compliance with such regulations "and its imposition of responsibility upon thebroker is an insufficient predicate, by itself, on which to base a finding that the relationship is not one ofindependence but of employment" (Matter of 12 Cornelia St. [Ross], 56 NY2d 895, 898[1982]; see Matter of Kearsh [Northeast Communications Contr.—Hudacs], 186AD2d 970 [1992], lv denied 81 NY2d 711 [1993]). The principal purpose served by theserequirements that define Garrett's relationship with claimant was to ensure that customers dealing withclaimant knew that Garrett was the entity through which these trades were placed and thesetransactions were made.
Equally important, the traditional criteria normally attendant to the existence of an employmentrelationship are not present. It is undisputed that Garrett did not hire claimant (see Matter of Singh[Thomas A. Sirianni, Inc.—Commissioner of Labor, 43 AD3d at 499), nor did it have anyinput in his daily work schedule or work activities (see Matter of Noel [Life Alert Emergency Response, Inc.—Commissionerof Labor], 38 AD3d 1082, 1084 [2007]). It did not establish any sales quotas for him tomeet, nor did it pay any of his employment expenses (see Matter of Perdue [Environmental Compliance, Inc.—Commissioner ofLabor], 47 AD3d 1139, 1140-1141 [2008]). It did not pay him a salary or a bonus, nor didit provide him with any employment benefits (see Matter of MacFarlane [Aid Assn. for Luterans Corp.—Commissionerof Labor], 35 AD3d 1076, 1077 [2006]). All commissions that were earned pursuant totrades that claimant conducted were shared between claimant, the partnership and Garrett and, in eachinstance, were reported for tax purposes as nonemployment compensation (see Matter of Hertz Corp. [Commissioner ofLabor], 2 NY3d 733 [2004]; Matter of Stiefvater Real Estate, Inc. [Commissioner of Labor], 34 AD3d1176, 1178 [2006], lv denied 8 NY3d 807 [2007]).
What control Garrett did exercise over claimant was solely the result of its legal obligation to fullycomply with NASD regulations and, as such, does not constitute substantial evidence establishing thatan employment relationship with claimant existed. Therefore, the Board's decisions must be reversed.
Cardona, P.J., Peters, Carpinello, Lahtinen and Kavanagh, JJ., concur. Ordered that the decisionsare reversed, without costs, and matter remitted to the Unemployment Insurance Appeal Board forfurther proceedings not inconsistent with this Court's decision.