## Facts

- Three family members were officers and shareholders of a closely held family corporation in the wrecking business.
- Each claimant owned 40 shares; the corporation had 205 outstanding shares.
- During periods of insufficient work, the family would meet and, by majority vote, decide which family members would be “laid off.”
- The shareholders voted to “lay off” the claimants because it was their turn under the family’s rotation practice.
- The claimants promptly filed for unemployment compensation benefits following the vote.
- The Bureau of Employment Security denied benefits as to each claimant on the ground of self-employment.
- A referee reversed and awarded benefits, but the Unemployment Compensation Board of Review reversed the referee, finding the claimants had enough control to lay themselves off and therefore were self-employed and ineligible under §§ 402(h) and 402(b)(1).

## Issues

1. Whether corporate officers and substantial shareholders who participate in deciding their own “layoff” are “unemployed” within the meaning of Pennsylvania’s unemployment compensation law.
2. Whether such claimants should be treated as self-employed—because they control the enterprise and their separation from work—so that statutory disqualifications under §§ 402(h) and 402(b)(1) apply.
3. Whether the corporate form may be disregarded in determining unemployment status for benefit eligibility when the claimants effectively control the business and their work status.

## Decision

- The Superior Court of Pennsylvania affirmed the Board of Review’s denial of benefits.
- The court held the claimants were self-employed and thus ineligible under § 402(h).
- The court accepted the Board’s finding that the claimants had sufficient control to lay themselves off and did so, supporting disqualification under § 402(b)(1).
- The court treated the matter as controlled by prior precedent permitting disregard of the corporate entity to assess whether claimants are truly unemployed or merely experiencing an unremunerative period in their own business.

## Legal Principles

- In determining unemployment benefit eligibility, a court may disregard the corporate entity where shareholder-officers of a closely held corporation effectively control their work status and the business operations.
- Claimants are not “unemployed” in the statutory sense when their lack of work results from decisions they control within their own enterprise, even if they are nominally employees of a corporation.
- When claimants’ separation from work is attributable to owner-controlled business decisions, the situation may be treated as self-employment with temporarily unremunerative business activity, triggering disqualification under § 402(h).
- A claimant who effectively chooses or controls the cessation of work may be disqualified under statutory provisions addressing voluntary separation from work, including § 402(b)(1).

## Conclusion

The court affirmed denial of unemployment compensation to shareholder-officers of a family corporation because their owner-level control over layoff decisions meant they were not involuntarily unemployed; instead, the court treated them as self-employed individuals whose business temporarily lacked sufficient remunerative work, making them ineligible under §§ 402(h) and 402(b)(1).


Roccograndi Unemployment Compensation Case, 178 A.2d 786 (Pa. Super. Ct. 1962)