Roccograndi v. Unemployment Comp. Bd. Of Review

Brief Fact Summary. Members of a family corporation applied for unemployment compensation when they laid themselves off during times of poor business.

Synopsis of Rule of Law. Corporate form is ignorable when applicants for benefits can exert control over a corporation to fire themselves or hire themselves at will because they are considered self-employed.

Facts. Roccograndi (P) and two other applicants applied for unemployment benefits when they were “firedâ€. All applicants were members and shareholders of a family corporation that laid off family members during poor seasons so they could qualify for benefits. The Unemployment Compensation Board denied their claim, finding them instead to be self-employed. A referee reversed, so the Board of Review (D) reversed the referee.

Issue. Is corporate form ignorable when applicants for benefits can exert control over a corporation to fire themselves or hire themselves at will because they are considered self-employed?

Held. (Montgomery, J.) Yes. Corporate form is ignorable when applicants for benefits can exert control over a corporation to fire themselves or hire themselves at will because they are considered self-employed. The Unemployment Compensation Act is not to benefit the self-employed. Previous case law has ruled that the corporate form may be ignored in cases like Roccograndi’s (P). The Board of Review’s decision is affirmed.

Discussion. To qualify for state benefits, the applicant must be within the class eligible for the benefits. The self-employed do not qualify. In closely held corporations, the courts have found that members retain too much control over their ability to hire or fire themselves and are actually self-employed. This is a public policy decision by legislature.