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Archive for the category “Musings: Unemployment Compensation”

Unemployment Compensation Over Payment Cases – Fault or No Fault?

People who are out of work often have the option to file for, and collect, unemployment compensation benefits to help fill the gap, financially speaking, until they can secure new employment.  As one may expect, however, not everyone who applies for benefits are eligible to collect them.  Ineligibility for benefits can be caused by a variety of factors including, but not limited to, issues regarding self-employment (see here and here), conflicts with other benefits (see here and here), conflicts with retirement (see here and here), issues surrounding termination due to willful misconduct (see here and here and here), issues surrounding whether one voluntarily quit (see here), and/or issues regarding whether one is available for work (see here).

Now, there is a delay between one’s application for benefits and a ruling that one is ineligible and, very often, during that interval a claimant will receive benefits.  If, after receipt of benefits, it is determined that the claimant was ineligible, then the benefits he received would be considered, retroactively, an over payment to him as he ought not have received them in the first place due to being declared ineligible.

The obvious question here is this: what is the consequence to receiving benefits to which one is not entitled?  There are two possible results based on a finding of the claimant’s intentions when his application for benefits were made.  Were the claimant’s intentions “innocent” (in that he acted honestly with Unemployment Compensation at all times) when he applied for benefits which, as a result of the same, he was granted benefits inadvertently?  Or, were did the claimant act with deception or fraud when applying for benefits which resulted in him being dishonest with Unemployment Compensation?

For example, the Claimant honestly may not have fully understood the legal distinctions between “employee” and “contractor” (see here) when he applied for benefits or he honestly may not view the conduct which led to his termination as willful misconduct (see here and here and here) or he honestly may not have fully understood the interplay between Unemployment Compensation benefits and other benefits (see here and here) or he honestly may not view his termination from employment as voluntary (see here).  If this is the case, then his over payment would be considered to have been caused by no fault of the Claimant’s own

By contrast, the Claimant, when applying for benefits, may have intentionally lied about the cause of his termination, or lied about the status of his side job, or intentionally obscured his other sources of income (e.g.: workers’ compensation benefits).  If this is the case, then his over payment would be considered to have been the result of the Claimant’s act of deception and, therefore, brought about by a fault of his own.

If the Claimant’s over payment is due to no fault of Claimant’s own (as described above), the consequence is that if he were to collect unemployment compensation at any time over the following three years, his benefits will be deduced by the amount of the over payment as paid through monthly installments.  If the Claimants over payment is due to Claimant’s fault (as described above), the consequence is that the Claimant must immediately repay all of the benefits at pain of penalties, interest, and other sanctions.

Now, like nearly all things in in the American legal system, determining whether the Claimant was overpaid, and whether that over payment was due to the fault of the claimant (as described above), is determined at a hearing after the presentation of evidence and testimony.  Sometimes this can be done at a single hearing but, more often than not, two hearings will be held: the first to determine eligibility and the second (if the claimant is found ineligible) to determine whether any payments he received were due to his fault (as defined above).  Most of the time, Claimants do their best to fill out the application for benefits and simply do not know how certain terms are used and/or have a different view of the facts surrounding their termination from employment, and, as a result, they will not be required to repay their over payments.  Occasionally, however, a Claimant actively tries to deceive Unemployment Compensation and, for that, immediate repayment will be due.

Unemployment Compensation Hearings: Best Evidence Rule Not So Great

Unemployment Compensation Referee’s hearings, due to their nature as administrative hearings and of limited scope, traditionally have allowed a somewhat lax application of the Pennsylvania Rules of Evidence.  For the most part, this tends toward keeping the hearings fast moving, relatively inexpensive to litigate, efficient, and to the point.  I stress the word “lax,” as opposed to say “eliminated,” as the rules of evidence are not disposed of or vitiated, but simply given common sense application to a quasi-judicial hearing regarding the very narrow issue of whether one is entitled to receive government benefits during one’s unemployment.

For the most part, easing up on the rules makes a lot of sense as litigants, especially the newly cash strapped claimant, has not got the money to call in experts, subœna extensive records, or find and secure multiple witnesses.  Indeed, such an approach would seem to only serve to mud up the gears of an already overburdened Department of Labor regarding such generally simple issues.  So, for example, some flexibility on hearsay is allowed, as well as allowing the admission of medical records without a medical expert, or even allowing some “narrative” testimony, if only for the practical purpose of bringing these matters to a relatively speedy and efficient close.

I think the general flexibility on the rules of evidence makes some sense and I generally do not have a problem with it, especially since I have never had an experience where the flexibility in the rules centered on the main issues or any dispostive aspect of the many cases I have handled.  Actually, allow me one caveat on that statement: when a Referee’s laxity on the rules on a central issue causes me to lose a case, I have had pretty consistent success in having the decision overturned by the Board of Review on appeal.

So, why am I writing all of this?  Let us focus on a specific rule of evidence, specifically Rule 1002, which reads as follows:

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An original writing, recording, or photograph is required in order to prove its content unless these rules, other rules prescribed by the Supreme Court, or a statute provides otherwise.

Comment: Pa.R.E. 1002 differs from F.R.E. 1002 to eliminate the reference to Federal law. This rule corresponds to the common law “best evidence rule.” See Hera v. McCormick, 425 Pa. Super. 432, 625 A.2d 682 (1993). The rationale for the rule was not expressed in Pennsylvania cases, but commentators have mentioned four reasons justifying the rule. (1) The exact words of many documents, especially operative or dispositive documents, such as deeds, wills or contracts, are so important in determining a party’s rights accruing under those documents. (2) Secondary evidence of the contents of documents, whether copies or testimony, is susceptible to inaccuracy. (3) The rule inhibits fraud because it allows the parties to examine the original documents to detect alterations and erroneous testimony about the contents of the document. (4) The appearance of the original may furnish information as to its authenticity.

5 Weinstein & Berger, Weinstein’s Evidence § 1002(2) (Sandra D. Katz rev. 1994).

The common law formulation of the rule provided that the rule was applicable when the terms of the document were “material.” The materiality requirement has not been eliminated, but is now dealt with in Pa. R.E. 1004(d). That rule provides that the original is not required when the writing, recording or photograph is not closely related to a controlling issue.  The case law has not been entirely clear as to when a party is trying “to prove the content of a writing, recording, or photograph.” However, writings that are viewed as operative or dispositive have usually been considered to be subject to the operation of the rule. On the other hand, writings are not usually treated as subject to the rule if they are only evidence of the transaction, thing or event. See Hamill-Quinlan, Inc. v. Fisher, 404 Pa. Super. 482, 591 A.2d 309 (1991); Noble C. Quandel Co. v. Slough Flooring, Inc., 384 Pa. Super. 236, 558 A.2d 99 (1989). Thus, testimony as to a person’s age may be offered; it is not necessary to produce a birth certificate. See Commonwealth ex rel. Park v. Joyce, 316 Pa. 434, 175 A. 422 (1934). Or, a party’s earnings may be proven by testimony; it is not necessary to offer business records. See Noble C. Quandel Co., supra.  Traditionally, the best evidence rule applied only to writings, but Pa.R.E. 1002 may be applicable to recordings or photographs. However, recordings and photographs are usually only evidence of the transaction, thing or event. It is rare that a recording or photograph would be operative or dispositive, but in cases involving matters such as infringement of copyright, defamation, pornography and invasion of privacy, the requirement for the production of the original should be applicable. There is support for this approach in Pennsylvania law. See Commonwealth v. Lewis, 424 Pa. Super. 531, 623 A.2d 355 (1993) (video tape); Anderson v. Commonwealth, 121 Pa. Cmwlth. 521, 550 A.2d 1049 (1988) (film).

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This rule is commonly known as “the best evidence rule,” and, as you can see it, more or less, requires the best available version or copy (or what have you) of a piece of evidence is to be produced at a hearing as opposed to a duplicate.  So, for example, an original signed copy of a contract is always preferred to a duplicate.  The way this rule would be employed is if an attorney, through his witness, attempts to introduce that copy as evidence.  The opposing attorney would object on the basis that the copy is not “the best evidence” and the judge would rule on whether it was.  If it was not the best evidence, the objection would generally be sustained and the document would be inadmissible.

I recently had a case before an Unemployment Compensation Referee in Philadelphia.  The opposition (the employer) attempted to introduce a Collective Bargaining Agreement (which laid out relevant issues to the case I was handling) into evidence.  The copy of aforesaid Agreement presented by the employer did not contain a signature from the employer!  I objected to the admission of the Agreement on the basis that it was not the best evidence; a contract with no signature is hardly a contract!

The Referee’s ruling on my objection was quite startling and is the inspiration of this article.  I would not have been surprised if my objection was overruled on the basis of the above-mentioned need for efficiency or something like that; for example, the Referee could have said that the employer’s testimony identified the copy of Agreement as being a true and accurate copy of the original Agreement executed by, and applicable to, both parties regardless of whether the signatures were present.  Unfortunately, that is not what the Referee ruled.  He ruled that, by order of his superiors within the Department of Labor, the best evidence rule will no longer be applied at unemployment compensation hearings and, therefore, any objections made on that basis will be overruled.

I was absolutely shocked!  Suddenly practical laxity has declined into total abdication and ignorance of clearly established rules of evidence.

So, let this article forewarn any of you who practice Unemployment Compensation Law: the best evidence rule is currently, and indefinitely, in abeyance at Referee’s hearings in Pennsylvania.

The Secret to Unemployment Compensation Defense

I have litigated dozens, if not hundreds, of unemployment compensation cases.  I represent both claimants and employers but I more frequently represent claimants.  I think it is fair to say that claimants are more likely to win an unemployment compensation case against an employer due the nature of the law, but I think employers could increase their chances of success if they just spent a little more time and effort pursuing, preparing, and presenting their cases.

When I represent claimants I object pretty aggressively to the testimony, documentation, and evidence presented by employers mainly because they almost always are, to some degree if not totally, hearsay.  I think my success in representing claimants is due, at least to some degree, in preventing the employer’s evidence from being presented.

Now, I admit that I don’t want to give my opponents any advantages, but I think some very basic things could go a long way for employers.  Employers just do not present sufficient competent evidence to win.  Documentation, as much as is relevant, is always helpful.  When wondering whether to bring something, it is always wiser to bring it and not need it than the opposite.  Unfortunately, much of the documentation brought as evidence contains the statements of people who do not appear at the unemployment compensation hearing and is, therefore, hearsay.

This leads me to the single biggest error made by employers at unemployment compensation hearings, which is their failure to bring witnesses.  If an employer wishes to have documentation with the statements of others introduced into evidence at an unemployment compensation hearing, then the employer must bring the person(s) who made the statements to the hearing to provide testimony as to the statements in the documentation.  Furthermore, if someone is terminated for cause, then a witness to the incident(s) of misconduct giving rise to the termination is critical to win an employer’s case.  Many employers will bring the “boss,” whether that is the C.E.O. or president or manager or what have you, as a witness.  The problem is that the boss is usually too disconnected to have any personal knowledge of the claimant’s alleged misconduct which gave rise to his termination.  Therefore, any testimony from the boss about the misconduct is hearsay.

Another typical mistake is to bring the human relations person to the hearing.  The same problem with the boss applies to the HR person.  While the HR person can certainly introduce documentation in a person’s employee file, this person too is almost always too disconnected from the claimant’s alleged misconduct to have personal knowledge of it; as a result his testimony is hearsay as well.

When it comes down to it, an employer must bring sufficient witnesses who have personal knowledge of the issues at hand to win its case, otherwise employers will consistently be at a disadvantage at unemployment compensation hearings.

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