IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR SUSSEX COUNTY
DIVISION OF UNEMPLOYMENT : C.A. No. 01A-04-003 
INSURANCE, : 
: 
Appellant, : 
: 
v. : 
: 
GEORGETTE SCHAEFER,
PATRICIA WHITTIER, andUNEMPLOYMENT INSURANCE 
: 
: 
: 
APPEAL BOARD, : 
: 
Appellee. : 
DECISION ON APPEAL FROM UNEMPLOYMENT INSURANCE APPEAL BOARD
DATE SUBMITTED: September 24, 2001
DATE DECIDED: December 19, 2001
Thomas H. Ellis, Esquire, Department of Justice, 820 N. French
Street, Wilmington, DE 19801
Georgette Schaefer, 27762 Astrangia Ave., Little Torch Key, FL
33042
Patricia Whittier, 27762 Astrangia Ave., Little Torch Key, FL 33042
Stephanie Ballard, Esquire, Department of Justice, 820 N. French
Street, Wilmington, DE 19801
Graves, J.

Pending before the Court is an appeal which the State of Delaware,
Division of Unemployment Insurance ("the Division") has filed
seeking review of a decision of the Unemployment Insurance Appeal
Board ("Board") awarding unemployment benefits to Georgette
Schaefer ("Schaefer") and Patricia Whittier ("Whittier")
(collectively referred to as "claimants"). This constitutes my
decision reversing the Board and ruling that Schaefer and Whittier
are not entitled to benefits.

PROCEDURAL OVERVIEW

Schaefer and Whittier are officers and shareholders of a
corporation, whose business is a restaurant in Rehoboth Beach,
Delaware. Schaefer and Whittier also work as employees of the
corporation. On September 30, 2000, claimants closed the business
for a six month period when not as many tourists were in Rehoboth
Beach as during the other six months (referred to as "the slow
period"). They thereafter filed claims for unemployment insurance
benefits. The Claims Deputy referred the matter to the Appeals
Referee to make an initial determination as to whether claimants
were eligible to obtain benefits. The Referee, after taking
evidence, concluded they were. The Division filed an appeal from
that decision. The Board consolidated Schaefer and Whittier's cases
and heard further evidence. The Board also concluded they were
entitled to benefits. The Division appealed to this Court, where
the cases also have been consolidated.

FACTS

The facts, as developed at the hearing before the Appeals
Referee and the Board, are undisputed. They are as follows.
Schaefer and Whittier formed Bad Girls, Incorporated, and the
corporation's business is a restaurant known as Plumb Loco, located
in Rehoboth Beach, Delaware. Schaefer is President of the
corporation and owns fifty percent of the stock. Whittier is Vice-
President and owns fifty percent of the stock. Besides being
officers and shareholders of the corporation, Schaefer and Whittier
work in the restaurant as employees.

The employers/employees paid into the unemployment insurance
fund as employer and recipient employees.

The restaurant opened in May, 1997. The first year, claimants
operated it year round. The corporation lost money during this
year. Beginning the next year, claimants started closing the
restaurant for periods of time. Schaefer and Whittier closed the
restaurant on September 30, 2000, and planned to reopen it again on
April 1, 2001. They closed the restaurant to avoid losing money. As
Whittier explained at the hearing before the Appeals Referee:

"And then we started taking a better look at this thing we
said that it was really you know six months that's where
you're really jamming making your money. It's the time to
be open."

It costs the business $6,000.00 to be closed and $11,000.00 to
be open during the slow period. The $6,000.00 consists of rent. The
savings result from the elimination of costs of electric, cable,
equipment, and payments to employees and the bookkeeper. 

During the time that the business was closed, claimants were
picking up the mail and paying the bills.

Schaefer and Whittier did not intend to declare bankruptcy.

Whittier reported wages as follows for 2000: no wages for the
first quarter; $7,500.00 for the second quarter; and $22,500.00 for
the third quarter. Schaefer reported wages as follows for 2000: no
wages for the first quarter; $5,097.14 for the second quarter; and
$13,290.00 for the third quarter. Testimony was to the effect that
the salary jumps during the third quarter were due to the increased
hours claimants worked during that quarter. Whittier thinks the net
profit for 2000 was $20,000.00.

The Appeals Referee concluded that claimants had good cause to
close the business during the winter because they closed it, not
for personal reasons, but for financial ones, i.e., to avoid
financial losses to their business and to enable it to remain
profitable. 

The Board agreed with the Appeals Referee that claimants made
a sound business decision to close their business for the winter
due to financial unprofitablility and, as such, left work for good
cause attributable to the work. The Board noted "that `employment'
for purposes of eligibility includes services performed by `any
officer of a corporation after December 31, 1995.' 19 Del. C. §
3302(1)(A)(i)."1 The Board found that claimants were corporate
officers and employees who had paid assessments into the
unemployment fund and reported wages for themselves as employees.

The Board looked to the law allowing claimants who have held
temporary or short-term positions to qualify for benefits in
certain situations. It stated:

The Delaware Supreme Court has held that, in making this
determination, one must consider the totality of the
circumstances with the critical factor being whether the
employee assumed the employment "with the intention to
remain as permanently as the job allows." City of
Wilmington v. UIAB and Wisher, Del. Supr., 516 A.2d 166,
168-69 (1986).... As guidance, the court in Wisher set a
"bright line" standard that an employee must work a
minimum of 130 working days or approximately six months
to be considered for benefits following "temporary"
employment. Id. The law provides that "An individual who
becomes unemployed solely as the result of completing a
period of employment that was of a seasonal, durational,
temporary or casual duration will not be considered as a
matter of law to have left work without good cause
attributable to such work solely on the basis of the
duration of such employment." 19 Del. C. § 3315(1).

The Board found that claimants closed the business because
they could not make a profit during the slow period and they
intended to reopen in the spring. The Board also found 

that the totality of the circumstances indicate that
claimants, in opening and operating their business, had
a "good-faith undertaking of actual and 
employment for an indefinite period." Wisher at 168.
regular

Furthermore, in working for six months and closing the 

business for six months (October through March), claimants
meet the minimum time frame set forth in Wisher, particularly since
a restaurant business is apt to have more than 130 working days
within a six month period.

The Board noted that claimants were not self-employed since
they are employee/officers of a corporation for which they
performed services. The Board found and concluded that claimants
acted in good faith, they paid into the fund, and they should be
entitled to collect just like any other employee of the business.
It affirmed the Referee's decision and awarded benefits.

DISCUSSION

The issue on appeal is one of law. The Court reviews questions
of law de novo. Hubbard v. Hibbard Brown & Co., Del. Supr., 633
A.2d 345, 348 (1993); State of Delaware Department of Natural
Resources and Environmental Control v. Murphy, Del. Super., C.A.
No. 00A-08-004, Babiarz, J. (March 19, 2001). The question here is
whether shareholders/officers/employees of a corporation, who have
the ability to control their salary draws and who continue to be
responsible for the running of the business, can collect
unemployment benefits when they shut down a business to insure the
corporation will remain profitable.

Other courts, in cases located which have faced the issue
which I consider to be identical to that at hand, have concluded
that such a claimant is not entitled to unemployment benefits.

In Moloney v. Administrator, Unemployment Compensation Act, 
Conn. Super., 334 A.2d 925 (1974), the Connecticut Superior Court
affirmed a decision of the unemployment commissioner concluding a
shareholder/officer/employee of a pool service business who was
unemployed during the slack season was not entitled to benefits. It
was significant that he could have kept himself on the payroll and
drawn his salary in twelve equal monthly installments instead of
the eight or nine installments which he drew. The commissioner
questioned whether he genuinely was out of work or just decided not
to pay himself during the period when the corporation was not doing
any business. The commissioner concluded, and the court affirmed,
that by not putting himself back on the payroll when he could have
done so, the claimant was restricting his availability to work
contrary to the purpose of the fund, which was to provide benefits
to those unemployed through no act or cause of their own.

In New York, where shareholders/officers/employees of
construction companies have sought benefits for unemployment during
the slow times, those benefits have been denied where the claimants
continued to perform some duties for the corporation, had the power
to arbitrarily fix salaries, and could increase their normal draws
during a busy season to compensate for lack of earnings during a
slow period. In the Matter of Lodico, N.Y. App. Div., 203 N.Y.S.2d
492 (1960); In the Matter of D'Angelo, N.Y. App. Div., 202 N.Y.S.2d
817 (1960). 

In the case of Child v. Bd. of Review of the Industrial 
Commission of the State of Utah, Utah Supr., 332 P.2d 928, 929
(1958), the Utah Supreme Court, addressing the claim of an
officer/employee of a construction corporation, concluded: 
A president of a corporation who is also manager, who
has year-round responsibility to operate the business of
the corporation and does so, cannot by purportedly laying
himself off as manager in those periods when there may be
no actual business activity, but when his corporate
duties and management activity persist in the pursuit of
further or continued business of the company, obtain
unemployment benefits. He is much in the same position as
a man working on a deferred commission payment basis who
certainly cannot be said to be unemployed during the time
the commission actually is not paid, but earned.

Here, there are three important factors in this Court reaching
its decision that claimants are not entitled to benefits. First, as
executive workers, they had year-round duties and responsibilities
from which they could not detach themselves except by resignation.
Claimants continued performing corporate responsibilities even
though the business was shut down. Second, claimants' business is
not truly seasonal. The change in seasons did not mandate it
shutting down; numerous restaurants and businesses in Rehoboth
Beach stay open year-round. Third, claimants' respective states of
unemployment are matters over which the claimants had control and
result from a deliberate decision to tailor the terms of
employment, and particularly, compensation, in such a way as to
avail themselves of unemployment compensation benefits. Claimants
had the ability to continue drawing their salaries year-round;
instead, they drew them during the two quarters when the restaurant
was busiest. Claimants, knowing that there would be a slow time,
should have allocated for the slow time in their salary and profit
draws. The reason for the unemployment compensation fund is not to
insure that a corporation obtains a certain amount of profit each
year. It is to compensate employees who are unemployed through no
fault of their own. These claimants do not fall in that category;
they controlled their employment status. They are not entitled to
unemployment insurance benefits.

CONCLUSION

For the foregoing reasons, the Court reverses the decision of
the Board and rules that claimants are not entitled to unemployment
insurance benefits.

IT IS SO ORDERED.