NY court nixes unemployment claim by stockbroker

ALBANY, N.Y. - A midlevel state appeals court ruled that a securities company doesn't have to pay unemployment compensation to a former stockbroker who made trades under the company's license.

The Appellate Division of State Supreme Court on Thursday reversed the Unemployment Insurance Appeal Board and sent the case back. The board noted that Andrew Garrett Inc. paid Charles Wannen's commissions, viewed his trades, took responsibility for bad trades, gave him business cards and stationery, and required him to identify himself as affiliated with the company.

The board decided that Wannen, who resigned his position in 2005, was eligible for unemployment benefits, and that Garrett, a securities broker/dealer licensed by the National Association of Securities Dealers, was liable for unemployment insurance contributions based on commissions it paid to Wannen "and other similarly situated stockbrokers."

Garrett appealed.

According to the court, the employment question depends on control over a claimant's work, but Garrett didn't hire Wannen, set his schedule or quotas, and didn't pay him a salary or bonus. The commissions were reported for tax purposes as non-employment compensation.

Wannen worked at a Nassau County office, which was operated by a partnership that contracted with Garrett. All three shared in his commissions. The partnership was formed by Mark Goetz and Edward Goetz.

"What control Garrett did exercise over claimant was solely the result of its legal obligation to fully comply with NASD regulations and, as such, does not constitute substantial evidence establishing that an employment relationship with the claimant existed," the court ruled. Justices Anthony Cardona, Karen Peters, Anthony Carpinello, John Lahtinen and E. Michael Kavanagh all concurred.

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